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

The answer to whether federal or state bankruptcy exemptions are better depends on two main factors: what your assets are worth and what state you live in.

Texas is one of the states that allows you to choose between taking state exemptions and taking federal exemptions.

A bankruptcy attorney can help you value your assets in order to determine which of the two sets of exemptions will be most beneficial to you. For example, you may be able to keep your house under the Texas exemptions but be forced to sell it under the federal exemptions, or vice versa.

Also note that federal exemptions do change from time to time. Specifically, the government adjusts the amounts every three years on April 1^st in accordance with the Current Consumer Price Index.

Only debts that are listed on your petition will be discharged in bankruptcy. Additionally, when you file a petition for bankruptcy, you are swearing under oath that you have included all of your debts and assets. Intentionally omitting a creditor is actually perjury.

Of course, you should exercise extreme care to ensure that you list all of your debts on your bankruptcy petition. However, there can be circumstances where an individual does not know about a creditor at the time of filing.

If you accidentally leave a debt off of your bankruptcy petition, the bankruptcy court will allow you to file an amendment to your schedules. As long as the amendment is filed in a timely manner, then the creditor will be added to your bankruptcy.

Note, though, that there are time limits on how long you have to file amendments. These time limits are strict and specific. That is why you should immediately seek the advice of a qualified bankruptcy attorney to ensure that you do not lose out on any discharges to which you would otherwise be entitled.

Consumers who file for bankruptcy tend to face a lot of the same problems, such as the loss of a job or a serious illness. For these individuals, bankruptcy is often a viable option for getting their finances back on track after a life-changing event.

Here are five of the most common financial pitfalls from which bankruptcy can help save a consumer.

1. Severe or prolonged illness

A prolonged or serious illness can lead to massive medical bills. Some families find themselves unable to get out from underneath mounting medical expenses. Bankruptcy is a legitimate way to eliminate medical-related debts.

Because medical bills are unsecured debts, they can be discharged in bankruptcy. In these cases, a Chapter 7 liquidation bankruptcy is often a viable option for eliminating your medical bills and getting your finances back under control.

2. Job loss

The poor economy has resulted in job loss and layoffs for countless individuals in Texas and across the United States. The reduction in income that comes from a job loss is one of the most common reasons for individuals filing bankruptcy.

Even if you find a new job, it can be difficult to catch up on your past overdue mortgage, car and credit card payments. Bankruptcy will stop the garnishment on your wages at your new job.

For individuals who find themselves suddenly without a job, bankruptcy may be the best solution.

3. Divorce

As a result of a divorce, debts are often apportioned between the two former spouses. One spouse may find themselves unable to repay their portion of the debt. Bankruptcy, be it Chapter 7 or Chapter 13, is one way that this individual can get back in charge of their finances.

Note that child support and alimony payments are not dischargeable debts in bankruptcy. Bankruptcy, however, can still wipe out unsecured debts incurred as a result of a divorce.

4. Massive consumer debt

Most consumers who file for Chapter 7 bankruptcy have between $50,000 and $75,000 in debt. With interest mounting on credit card debts, it can be difficult, if not impossible, for these consumers to catch up on their payments.

Rather than liquidating your retirement savings, you can consider filing for bankruptcy and have those debts discharged. Bankruptcy, in some cases, can be a matter of saving your financial future.

5. Impending foreclosure

Bankruptcy can be the solution for a homeowner who is facing imminent foreclosure. Filing for bankruptcy can put an immediate stop to a foreclosure. In many cases, due to exemptions, the homeowner will be able to keep their property.

If you are considering filing for bankruptcy in Texas for these other reasons, contact a qualified bankruptcy attorney today to receive expert advice on your options.

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

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

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

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

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

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

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

When you file for bankruptcy in Texas, you are required to list all of your assets on your bankruptcy petition. What many debtors do not realize, however, is that a potential legal claim against a third party is considered an asset for purposes of bankruptcy.

A bankruptcy attorney should always ask their clients whether they have any claims against any third party that could potentially be filed in court. Essentially, your bankruptcy attorney needs to know if you have any potential lawsuits.

Why is a potential lawsuit an asset? Because, if you file the claim and win the lawsuit, then you will likely receive financial compensation – and that money is obviously another asset.

One reason that it is so important that you tell your bankruptcy attorney about any potential lawsuits is that if you fail to list the claim on your bankruptcy petition, you could forever lose your right to file a lawsuit based on that claim.

For example, if you have a potential personal injury lawsuit against a driver that caused a car accident in which you were hurt, you must list that potential lawsuit as an asset. If you don’t list it, and you later attempt to file that lawsuit, you may be found guilty of committing bankruptcy fraud. You would then be prohibited from filing the lawsuit even after your bankruptcy case has concluded.

Upon your filing for bankruptcy, a bankruptcy estate is created. All of your assets, which includes potential lawsuits, then become the property of this estate. That is, it becomes property of the bankruptcy estate unless you are able to exempt it, which means that the proceeds of the settlement would be distributed amongst your creditors. For that reason, it is always the smartest move to list and attempt to exempt an asset than to not list it at all.

As always, being completely open and honest with your bankruptcy attorney is key to filing a successful petition.

Receiving a lawsuit summons is a very scary thing. Whether served by a law enforcement officer, private process server, or received by mail, the idea of facing a judge and a skilled attorney is very intimidating.  Fortunately, your legal options are very clear: (1) do nothing; (2) defend the law suit; (3) negotiate a settlement; or (4) file a bankruptcy.

The first option, do nothing, is obviously a bad choice. The court will enter a judgment against you and your wages may be garnished or property seized (e.g. the contents of a bank account). Even if the debt is ultimately paid or discharged in bankruptcy, the judgment will remain on your credit report for at least seven (7) years.

The second and third options, defend the law suit and/or negotiate a settlement, are very difficult to accomplish.  Once the creditor has hired an attorney and filed a lawsuit there is very little that a person or non-attorney debt settlement firm can do to “settle” the debt.  The collection attorney will use the legal processes to its advantage and knows that an unrepresented person is generally unable to successfully defend the lawsuit.  Even the lay-person-friendly small claims process can be filled with pitfalls. Additionally, the cost of hiring an attorney and defending a lawsuit can get very expensive and the collection attorney is betting that you will not pay $3,000 to an attorney to contest a $3,000 credit card debt. The collection attorney believes (rightly) that it has the advantage and will ultimately obtain a legally enforceable judgment against you. Depending on your cardholder agreement, you may be liable for the principal, interest, penalties, court fees, and attorney fees. Why would they settle for less?

The final option, bankruptcy, is a very powerful tool. Bankruptcy immediately stops the lawsuit and prevents the entry of a judgment. Once the individual’s obligation to pay the debt is discharged by the bankruptcy court, the lawsuit must be dismissedand cannot be refilled. Filing bankruptcy prevents almost all future lawsuits from being filed and can discharge the obligation to pay most court judgments.

If you have been sued by a credit card company, discuss your situation with an experienced bankruptcy attorney. There are many options for dealing with your financial difficulty, and a bankruptcy attorney can help you select the best course of action for you and your family.

The internet is full of half-truths that feed the speculative fears of the evils of bankruptcy. Most of this information comes from sources outside the bankruptcy process, like debt counselors, or financial planners who often are selling alternatives to bankruptcy. The most commonly stated “reasons to avoid bankruptcy” are:

1. It will ruin your credit

2. You will lose property

3. Not all debts are eliminated

4. You may be subject to repossession or foreclosure

5. You may not be able to get a job

6. You cannot get credit

Those are serious allegations, so let’s look at them.

First, bankruptcy is typically a last-resort option, so the average bankruptcy filer’s credit is already ruined. The bankruptcy wipes the slate clean and stops future adverse reporting for past debts. In other words, if you are 120 days late on a credit card, your credit report will continue to show that you are 120 days late month after month. A bankruptcy stops that reporting from the day you file your case so your credit can improve.

Second, it is exceedingly rare that a debtor loses property unexpectedly. When it happens it is generally the result of poor communication with the client. In all other cases the debtor will only lose property that is voluntarily surrendered, meaning the debtor has made a financial decision to not keep a house or car.

Third, there are actually very few debts that cannot be eliminated. The most common types are child support, some IRS debts, and student loans. However, even these non-dischargeable debts can be managed within the bankruptcy.

Fourth, the bankruptcy automatic stay will stop any foreclosure or repossession. If the creditor wants to take possession of the property after the bankruptcy filing, it must petition the bankruptcy court for permission.

Fifth, it is against the federal law to discriminate against a job applicant solely on the basis of filing a bankruptcy.

Sixth, many bankruptcy debtors have rebuild their financial lives within a year or two of the bankruptcy filing. It takes time and effort to rebuild, but there are no past debts to drag you down!

Don’t get your bankruptcy information from internet sources that use scare tactics and half-truths. Talk to an experienced bankruptcy attorney and get the facts. Find out how bankruptcy can solve your debt problems today.

When Congress passed the Fair Debt Collections Practices Act (“FDCPA”) it stated that its purpose is “to eliminate abusive debt collection practices by debt collectors[.]” Congress cited the need for consumer protection because of the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.  Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

Abusive debt collection practices are just bad news.

On February 22, 2010, the United States Supreme Court declined to hear an appeal from the Fifth Circuit U.S. Court of Appeals on a FDCPA case: Kay v. Gonzales, U.S., No. 09-542. In that case the Plaintiff, Jose Gonzalez, received a letter from the Kay Law Firm. The letter, written on law firm letterhead and unsigned, told Gonzalez, “Please be advised that your account, as referenced above, is being handled by this office.” On the back of the letter was this statement: “At this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.” Gonzalez sued the Kay Law Firm for violating the FDCPA which prohibits debt collectors from falsely representing or implying that the debt collector is an attorney or that the communication is from an attorney. 

The federal district court found that the disclaimer was sufficient to notify Gonzalez that the collection matter was not being handled by an attorney and the Gonzalez’s case was dismissed. On appeal the Fifth Circuit Court of Appeals found that the letter’s disclaimer on the back was mixed in with “legalese” which may not be sufficient to notify the consumer of the attorney’s non-involvement in the case. The Fifth Circuit reversed the district court dismissal and remanded the case for trial. Gonzalez v. Kay, No. 08-20544 (5^th Cir., 2009). Now that the Supreme Court has denied the Kay Law Firm’s appeal, Mr. Gonzalez will have his day in court.

The Fifth Circuit in its opinion cites the Seventh Circuit Court of Appeals for why it is important to protect against this type of deceptive collection practice:

“An unsophisticated consumer, getting a letter from an ‘attorney,’ knows the price of poker has just gone up. And that clearly is the reason why the dunning campaign escalates from the collection agency, which might not strike fear in the heart of the consumer, to the attorney, who is better positioned to get the debtor’s knees knocking.” 

Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996).

If you receive a collection letter from a law firm, speak to an experienced bankruptcy attorney and learn your rights. Bankruptcy attorneys are trained in matters of debt defense and can help explain your rights under the FDCPA and the federal bankruptcy laws. Don’t let an unscrupulous debt collector get your “knees knocking.”

While many attorneys advertise their qualifications on their web sites, NO ONE should hire legal counsel based solely upon the results of an online search. However, information you obtain from the internet can be useful in narrowing your search, provided you know what to look for in a prospective bankruptcy attorney. 

First, is the attorney licensed to practice in your area? Usually the attorney’s biography will state his or her bar admissions. Each of the 94 federal judicial districts has a bankruptcy court, and these courts are defined by geographic jurisdictions. More information concerning federal court geographic boundaries can be found here.

An attorney who is not a member of the bar where you reside will have to petition the court for admission pro hac vice (“for this event only”). An attorney who is not active in a court may not have useful information regarding the bankruptcy judge, the trustee, local customs and rules, or contacts to make your case go smoothly.

Second, how long has the attorney been practicing bankruptcy law? The federal bankruptcy laws are complex and attorneys spend years learning how to successfully navigate a case from start to finish. Don’t be a test case or a learning experience for a new attorney.  

Third, does the attorney belong to any professional associations? The National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute are two outstanding resources for attorneys to keep current on changes in the bankruptcy law. Member attorneys also receive training and information that is beneficial to their clients.

An experienced bankruptcy attorney is easy to find, if you know the tell-tale signs. Use these signs to narrow your search, and then interview your candidates either by phone or in-person. Your choice of a bankruptcy attorney is a serious matter and should be carefully considered, so get to know your attorney’s qualifications before your make a hiring decision.

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

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

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

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

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

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

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

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

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

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

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

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

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

Debtor – an individual who files a bankruptcy petition

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

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

Exemptions – legal protections that shields property from creditor collection

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

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

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

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

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

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

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

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

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

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

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

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

Lately municipal bankruptcy has been the subject of many news features as economic troubles press cities to consider their legal options. San Diego and Los Angeles are two major cities that are reportedly considering federal bankruptcy protection. 

While federal bankruptcy protection has been available to U.S. cities since the 1930’s, only a few hundred have actually filed. Chapter 9 of the Bankruptcy Code provides a financially distressed municipality the opportunity to reorganize its debts under federal protection. A “municipality” as defined in the Bankruptcy Code includes cities, counties, and special districts. This definition does not include states.

A Chapter 9 bankruptcy can only be commenced after the governing body specifically authorizes the filing. Twenty-six U.S. states have prohibited their municipalities from filing bankruptcy: Alaska, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Mississippi, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming. 

Once filed the federal bankruptcy law’s automatic stay provision enjoins creditors from taking any collection action against the municipality. The automatic stay provides an opportunity for the municipality to raise new revenues, renegotiate contracts, or restructure its debt without pressure from creditors. Chapter 9 is tricky business for the bankruptcy court because the Tenth Amendment to the U.S. Constitution and section 904 of the Bankruptcy Code prevents a federal bankruptcy court from interfering with the city’s political or governmental powers. The bankruptcy judge is largely a facilitator of the restructuring process.

The essence of a Chapter 9 bankruptcy is that it gives the municipality an opportunity to reorganize and restructure its debts through an agreement with its creditors called a “Plan of Adjustment.” If a creditor cannot agree with the municipality, Chapter 9 allows the bankruptcy court to force the municipality’s Plan of Adjustment on the non-consenting creditor. The bankrupt municipality is also empowered to accept or reject contracts and leases through the Plan of Adjustment.

Chapter 9 municipal bankruptcy is a very rare and special bankruptcy case. The stigma and complexity of Chapter 9 makes it a last option for U.S. municipalities. However, if the debt problem is serious and substantial enough, the federal bankruptcy laws can protect a city of millions and give it a chance for a fresh start, just like it can protect an individual or family in financial distress.

Bankruptcy can have a serious impact on an ex-spouse. That is because a family court will often assign payment of a joint debt to one party only. In many cases the obligated party lacks the resources to pay the debt in full or to refinance it. Therefore the ex-spouse remains legally obligated to the creditor. This is often the case with automobile debt and credit cards with large balances.

A court-ordered debt to a former spouse is given special consideration by the bankruptcy laws. In a Chapter 7 bankruptcy case these debts are generally non-dischargeable. An order directing payment to a third party (e.g. a mortgage payment) is also generally non-dischargeable if the payment is effectively a form of spousal support. Even an obligation to pay your ex-spouse's attorney fees in connection with the divorce proceeding is generally non-dischargeable.

While past due support obligations are also non-dischargeable debts in a Chapter 13 bankruptcy, debts not in the nature of support (e.g. a division of marital property) can be discharged. The ex-spouse must contest the debtor's characterization of the obligation and convince the bankruptcy court that the debt is a support obligation in order to save it from discharge. If the court determines the debt is a support obligation, it must be paid by the debtor through the Chapter 13 bankruptcy.

Whether the family court-ordered obligation arises from a property division or from a support obligation, the ex-spouse will likely suffer harm from the debtor's bankruptcy filing. The sad truth is that any non-payment of a joint monthly obligation will harm the ex-spouse's credit report and there is little that can be done to remedy it. If the debt is discharged through the debtor's Chapter 13 bankruptcy, the creditor may elect to pursue the ex-spouse and there will be no recourse against the debtor.

Regardless whether you or your ex-spouse owes a court-ordered joint obligation, if bankruptcy is in the future, you should seek professional help. It is important to evaluate the impact the bankruptcy will have on the debt and determine a course of action that will best protect you. Timing can be very critical, so consult with an experienced bankruptcy attorney early.

The length of a bankruptcy case depends primarily on which type of bankruptcy you file: Chapter 7 or Chapter 13.

The average Chapter 7 bankruptcy case takes between 3 and 6 months before the debtor receives their bankruptcy discharge. Because a discharge of debts is the goal of a Chapter 7 bankruptcy, the bankruptcy case, from the debtor’s perspective, is essentially over once the discharge is obtained.

Note that even though it takes 3 to 6 months to obtain a discharge, an automatic stay that protects you from further debt collection efforts goes into place immediately after you file for bankruptcy.

By their nature, Chapter 13 bankruptcies take longer than Chapter 7 bankruptcies. A Chapter 13 bankruptcy is a repayment plan. Under the repayment plan, the debtor is given a set amount of time – between 3 and 5 years – to repay the reduced debts. Once the repayment plan is successfully completed, the debtor’s remaining debts can be discharged.

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

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

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

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

April 15 is quickly approaching and many Americans are filing their income tax returns. A common question at this time of year is, “Will I lose my income tax refund if I file Chapter 7 bankruptcy?” The short answer is no, at least if you consult with an experienced bankruptcy attorney.

The safest situation is to file your tax return and receive your refund prior to filing bankruptcy. The bankruptcy estate is calculated as of the date that you file your case. If the tax refund money is gone on the date you file your bankruptcy, there is generally no way for the bankruptcy trustee to make a claim against the tax money.

However (it’s funny how bankruptcy law, like life, has many “howevers”), there are exceptions to the general rule. For instance, if you pay an insider creditor on an antecedent debt, the trustee can avoid the transfer. An “insider” is a basically person close to you like a friend, family member, or business associate. If you owe an insider money, and you repay the debt from your tax refund, then the trustee could ask the insider to repay the money to the bankruptcy estate. Paying an insider within a year of filing bankruptcy usually leads to problems.

You may run into a similar problem if you pay down a loan, or pay any creditor a large lump sum within 90 days of filing bankruptcy. You could also run into an equity issue by paying off a vehicle with a large tax refund. These may seem like responsible actions, but the bankruptcy laws are full of landmines. Before spending your tax money it is wise to consult with your bankruptcy attorney to avoid these sticky situations.    

Another issue that occasionally happens is when a bankruptcy debtor files a Chapter 7 case after filing a tax return, but before receiving an expected small refund. “No problem,” says the bankruptcy attorney, until the IRS adjusts the small refund into a large refund. There is “no problem” if the debtor has available exemptions to protect the refund, the debtor simply amends his schedules. But sometimes there is no way to protect all of the refund and the trustee is able to collect. That is an unfortunate situation for someone that really could use the extra money, and a case that can be avoided by waiting until the refund is received and spent.

If you are concerned about keeping your income tax refund, consult with an experienced bankruptcy attorney. Your attorney can advise you on property that is exempt (protected) and non-exempt (not protected) before you file your case and risk losing any property.

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

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

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

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

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

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

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

Bankruptcy is an area of the law that is fraught with myths and misconceptions. Often people know very little about the true nature of bankruptcy and how it will affect them. It is important to understand that bankruptcy is not something to be feared. Rather, it is a tool that can be used in the appropriate circumstances to eliminate or reduce your debts and give you a fresh opportunity to rebuild your finances.

In that spirit, we’ve put together this list of 5 things that most people don’t – but should – know about bankruptcy:

1. Most people are able to keep most, if not all, of their assets: None of your property will be taken in a Chapter 13 bankruptcy because you will be repaying a portion of your debts over a set time period. In Chapter 7 bankruptcy, you are allowed to keep some of your property under what is known as “exemptions.” In Texas, you can choose between the federal exemptions statutes or the Texas state statutes. Large assets, such as the equity in your home and vehicle, are protected, and many smaller assets, such as your clothing and household furniture, are exempt up to a certain amount.

2. You may be able to stop foreclosure and keep your home: As mentioned above, a generous amount of equity in your home is exempt under Chapter 7 bankruptcy. If you are behind on your payments, a Chapter 13 bankruptcy gives you the opportunity to catch up on your missed payments through a court-approved payment plan and has the effect of stopping any foreclosure sales dates.

3. You can often rebuild your credit after only a few years: While it’s true that a Chapter 7 bankruptcy stays on your credit report for 10 years and a Chapter 13 bankruptcy stays on your credit report for 13 years, the actual effect that bankruptcy has on your credit is often much less severe. Because bankruptcy wipes out your current debts, your cash is now freed up to pay your bills on time and improve your overall crediting rating. It is also possible get credit cards, albeit at higher interest rates, after you have filed for bankruptcy. If you use your new credit wisely, you can improve your score in much less time than you probably think.

4. Most people will never know that you filed for bankruptcy: Bankruptcy filings are public record, but in reality, very few people will ever find out that you filed for bankruptcy unless you choose to tell them. The only people who will receive notification are those who are directly involved in your bankruptcy in some way, such as your creditors. Even if your employer does find out that you’ve filed for bankruptcy, it is legal for them to fire you because of it.

5. The cost of hiring a bankruptcy lawyer is far less than the cost of making a mistake in filing for bankruptcy: Filing for bankruptcy requires you to comply with both Texas state and federal laws. It also involves a large amount of paperwork and court filings. If you make a mistake in your bankruptcy filing, your case can be dismissed. Also, by hiring an attorney you can maximize your exemptions, ensuring that you keep as many of your assets as possible. There is a limit on how often you can file for bankruptcy, so it is critical that you seek the advice of an experienced attorney to be sure it is done correctly.

Here are six of the most common reasons that people file for bankruptcy:

1. Stop a foreclosure on your home: Bankruptcy doesn’t eliminate your mortgage, but it does restructure your payment plan so you can catch up on missed payments.

2. Reduce medical bills: Overwhelming medical bills incurred as a result of a serious illness is one of the most common reasons for filing for bankruptcy. Filing for bankruptcy can greatly reduce or even completely eliminate your medical bills.

3. Loss of employment: Loss of employment is another of the most common reasons that people file for bankruptcy. Without a regular salary, you have no way to pay your bills, and your debts simply continue to mount. In some cases, bankruptcy is the only way out.

4. Stop repossession of your vehicle: If you file for bankruptcy quickly enough, your creditor could be forced to return your vehicle even if it has already been repossessed.

5. Stop harassing calls from creditors: When you file for bankruptcy, an automatic stay is put in place that prevents your creditors from taking steps to collect on your debts.

6. Stop wage garnishments: Wage garnishment is a type of debt collection. Like the harassing calls from creditors, the automatic stay will put a stop to the garnishment of your wages.

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

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

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

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

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

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

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

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

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

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

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

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

There’s a common misconception that a Chapter 13 bankruptcy will require you to pay back all of your debts in full. Quite the opposite is true. In many cases, the debtor’s unsecured debts are considerably reduced, with the debtor paying back only a percentage of what is owed.

Chapter 13 bankruptcy is essentially a debt repayment plan. The amount of debt you are required to repay depends on your disposable income and the value of your assets. For many petitioners, what they are required to pay back through their Chapter 13 debt repayment plan will be substantially less than what they currently owe.

An experienced Texas bankruptcy attorney can help you understand Chapter 13 bankruptcy and the effect that it will have on your debt.

A Chapter 7 bankruptcy debtor receives a discharge and the case closes generally within four to six months. Chapter 13 is a repayment plan that lasts three to five years. Why in the world would anyone choose to file Chapter 13? Below are five reasons why Chapter 13 may make sense:

Reason 1: A Forced Repayment Plan under Court Protection.

When a creditor is unwilling to work with you, a Chapter 13 can force the creditor to accept payments on your terms. Some debts, like child-support or taxes, are non-dischargeable through bankruptcy and must be paid. Chapter 13 allows the debtor to propose a three to five year repayment plan according to what you are able to pay. During this time the creditor is not allowed to take any collection action without permission of the bankruptcy court.

Reason 2: The Cram Down. 

In some cases a vehicle or other secured loan can be reduced to the value of the collateral. The debtor retains the property, but may pay a lower monthly payment and less in principle and/or interest. The loan term may be also lengthened or shortened in a Chapter 13.

Reason 3: Curing Home Loan Defaults and Lien Stripping

A debtor who has defaulted on a home loan can stop a foreclosure action and force the creditor to accept payments on the arrearage. Some debtors can receive a substantial benefit by stripping away a second or third mortgage.

Reason 4: The Effect of Bankruptcy May Be Shortened

While the federal law states that bankruptcy information can remain on your credit report for up to ten years, the “big three” credit reporting bureaus (Experian, Equifax, and Trans Union) will generally remove chapter 13 information seven years after the filing date. That means the bankruptcy will drop off your credit report two to four years after your last Chapter 13 payment!

Reason 5: Retain Non-Exempt Property

In some cases, a debtor may own property with equity that cannot be protected. Say, for instance, that the debtor owns a Harley Davidson motorcycle free-and-clear and the non-exempt equity is $10,000. In a Chapter 7 case the trustee will want either the motorcycle to sell, or a cash payment of $10,000 from the debtor. In a Chapter 13 the debtor does not lose the motorcycle, but will pay $10,000 through the bankruptcy plan to unsecured creditors over three to five years. 

Deciding between Chapter 13 and Chapter 7 requires careful deliberation. An experienced bankruptcy attorney can discuss the pros and cons of each bankruptcy chapter and help guide you to a healthy and successful fresh start.

On Wednesday, the Supreme Court heard arguments addressing the question as to whether lawyers can be held liable as debt collectors if they serve a foreclosure notice that may have been incorrect in its statement of the law.

At issue in this case is a notice sent to a woman named Karen Jerman. Jerman, who owned her home outright and had paid off her mortgage in full, was served a foreclosure notice by lawyers for Countrywide Home Loans.

In the notice, Jerman was told that she had to dispute the debt in writing. Jerman hired a lawyer to draft the written response. Countrywide later realized its mistake and withdrew its complaint.

Jerman filed a class action lawsuit against the Ohio law firm that represents Countrywide,  Carlisle, McNellie, Rini, Kramer & Ulrich, and against a particular associate attorney at the Carlisle firm.

In her lawsuit, Jerman claimed that the Carlisle firm violated the Fair Debt Collection Practices Act (FDCPA) by erroneously informing her that the FDCPA states that the debt would be presumed valid unless she disputed it in writing.

At issue is whether the lawyer’s mistake of law qualifies for the bona fife error defense under the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act excuses debt collectors if they can prove that their wrongdoing was not intentional and was in good faith. If this can be proven, then the debt collector is shielded from civil liability.

Jerman v. Carlisle comes to the Supreme Court as an appeal from a ruling made by the Sixth Circuit. The appellate court ruled that, while the law firm violated the law in requiring Jerman to object to the foreclosure in writing, the law firm nonetheless qualified for the bona fide error defense.

The Supreme Court will be deciding whether a debt collector’s unintentional legal mistake falls under the FDCPA’s bona fide error defense, thereby shielding the debtor collector from civil liability for violating the FDCPA.

Ultimately, the court’s decision in this case will affect the recourse potential plaintiffs have when making complaints about unfair debt-collection practices. It could also have an effect on the debt-collection practices themselves.

Jerman v. Carlisle is also significant because it will likely settle a split in the federal courts as to whether a debtor collector’s mistake of law, as opposed to a clerical error, qualifies as a bona fide error under the FDCPA.

If the Supreme Court rules in favor of Carlisle, then a debt collector will be able to assert a mistake of law as a defense to civil liability as a “bona fide error.”

Here are five situations that should tell you that your finances are in desperate shape and may need federal bankruptcy relief:

You regularly ask for payroll advances from your employer, take cash advances from credit cards, or borrow from payday loan companies.

Once a person is borrowing next month’s paycheck to pay this month’s bills, the situation is very grim. Taking constant payroll advances can jeopardize your job; credit card cash advances carry very high fees and interest; and payday loans have high interest rates. All of these advances have the same effect on your paycheck: there is less money next month to pay bills. This often creates an endless cycle of debt.

You are constantly late on paying basic monthly obligations including rent or mortgage, car payment, or utilities.

Late penalties can consume a paycheck very quickly. Late payments can also place your property at risk. For instance, if you are consistently late on your car payment, not only will you incur late fees, but at some point your lender may decide to repossess your vehicle.

You have stopped paying creditors and are ignoring collectors.

People who are unable to pay monthly bills often compound the problem by ignoring their creditors. Late notices turn into harassing phone calls which turn into court summonses which turn into wage garnishments. Nothing good can come from ignoring your debts.

Your paycheck is being garnished or your bank account is frozen.

People unable to pay their debts often wind up with court judgments and wage garnishments. Bankruptcy attorneys regularly receive desperate phone calls from people who have just discovered a wage garnishment or bank levy.

You are consistently depressed by a hopeless debt situation and contemplate illegal acts or suicide.

Individuals in debt often become depressed and feel that their situation is hopeless. Not so! The federal bankruptcy laws were written by Congress to give hope to those overwhelmed by debt. You can have a fresh financial start and a different future. There is no reason to commit an illegal act to solve a debt problem that can be fixed legally.

If you are experiencing any of the above warning signs, talk to an experienced bankruptcy attorney and consider your legal remedies. Don’t let debt control your life or your future. Take charge today!

Bankruptcy is the process by which a person legally declares themselves unable to pay their creditors for their outstanding debts. In general, bankruptcy proceedings are governed by federal law, but there are some aspects of bankruptcy that are governed by state law.

These state laws can vary considerably from one another, so it is important that you speak with an experienced Texas bankruptcy attorney to be sure you understand Texas’s bankruptcy laws.

A person can go into bankruptcy in one of two ways. One way is for the debtor’s creditors to petition the court to have the debtor declared bankrupt. The more common way is for a person to voluntarily file for bankruptcy.

There are several types of bankruptcy, and which type you file for depends on many factors, including whether you are a business or an individual, the amount of debt you have, the amount of income you have and your personal financial goals.

For individuals, the two most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 “wipes the slate clean,” so to speak. Most, if not all, of your debts are discharged, and you get a chance to start fresh.

Chapter 13 is a debt repayment plan. You get to keep all of your property in exchange for committing to a plan whereby you repay some or all of your debt over the course of 3 to 5 years.

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

There are two basic types of bankruptcy: liquidation and reorganization.

Chapter 7 falls into the liquidation category. It is referred to as a liquidation bankruptcy because any of your property that isn’t exempt can be sold (“liquidated”) and the proceeds used to pay back your creditors.

Chapter 13 is a reorganization bankruptcy. Under a Chapter 13 bankruptcy, you get to keep all of your property. Rather than wiping out your debts completely, a Chapter 13 bankruptcy “reorganizes” your debts, and a monthly payment plan is created by which you repay all or some of your debt over the course of 3 to 5 years.

Whether liquidation or reorganization bankruptcy is right for you depends on your financial situation and other individual circumstances. An experienced Texas bankruptcy attorney can advise you on the most beneficial course of action.

For free legal advice on Chapter 7 and Chapter 13 bankruptcy, contact the Texas bankruptcy law firm of Fears | Nachawati today. To speak with a Texas bankruptcy lawyer at no charge, simply email us or phone us toll free at 1.866.705.7584.

When you file for bankruptcy, an automatic stay is put in place that stops all debt collection proceedings against you. Under bankruptcy laws, wage garnishment is considered a collection proceeding. Therefore, when you file for bankruptcy, all wage garnishments against you will stop – including IRS wage garnishments.

If your wages are being garnished and you are considering filing for bankruptcy, contact the attorneys of Fears | Nachawati today for free legal advice. To receive free legal assistance from a Texas bankruptcy lawyer, email us or phone us toll free at 1.866.705.7584.

Whether or not you can keep your credit cards after you file for bankruptcy is up to the credit card company to decide.

When you file for bankruptcy, you must list any existing credit card balances. Those balances, because they are unsecured debts, will be wiped out by bankruptcy. The credit card company will then cancel your credit card.

However, you can choose to reaffirm your debt, which means you agree to pay the debt even though you could have it canceled by bankruptcy. Also, you may be able to keep a credit card that has a zero balance. Again, though, this decision is up to the credit card company.

There are specific limits set on how often an individual can file for bankruptcy. For Chapter 7 bankruptcy, you have to wait eight years after a previous Chapter 7 filing before filing again and six years after a previous Chapter 13 filing.

For Chapter 13 bankruptcy, you must wait two years after a previous Chapter 13 filing before you can file again and four years after a previous Chapter 7 filing.

Non-custodial parents facing mounting debts sometimes turn to bankruptcy as a way to get out from under their financial burdens. However, child support is not dischargeable in bankruptcy.

In fact, the Bankruptcy Reform Act of 1994 in part provides greater protection for debts owed to children and former spouses. These “domestic support obligations,” as they are sometimes referred to, are given high priority over other debts by the courts.

Also, if you owe back child support payments, you will still be responsible for those payments even if you successfully file for bankruptcy.

While bankruptcy will not relieve a parent of current or back child support obligations, it may still be a way to get back on track with your payments. By discharging other unsecured debts, such as credit card bills, you will free up money that can be put towards your domestic support obligations. 

To learn more about whether bankruptcy is the right option for you, contact the Texas bankruptcy lawyers of Fears | Nachawati for free legal advice. Simply email us or phone us toll free at 1.866.705.7584.

Some, but not all, tax debts are dischargeable in Chapter 7 bankruptcy. In order to have your tax debts discharged under a Chapter 7 bankruptcy, you must meet all five of the following conditions:

1. The debts are income taxes. Taxes other than income tax, such as fraud penalties, cannot be discharged in bankruptcy.
2. You filed a tax return for the debt you want to discharge at least two years before filing for bankruptcy.
3. The tax debt is at least three years old.
4. You pass the 240-day rule. This rule requires that your tax debt was assessed by the IRS at least 240 days before you filed for bankruptcy, or, alternatively, that the debt has not yet been assessed.
5. You have not committed tax fraud or willful tax evasion.

Note that you cannot discharge a federal tax lien under Chapter 7 bankruptcy. If the IRS already recorded a tax lien on your personal property before you filed for bankruptcy, then the tax lien will remain in place. The upshot is that you have to pay off the lien before you are allowed to sell the property.

For free legal advice on tax debts and other issues related to Chapter 7 bankruptcy, contact Fears | Nachawati. To speak with one of our Texas bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In order to be eligible to file for Chapter 7 bankruptcy, you must meet all of the following criteria:

• You must have received credit counseling within the six months prior to filing for Chapter 7 bankruptcy.
• You cannot have received a Chapter 7 bankruptcy discharge within the past eight years or a Chapter 13 discharge within the past six years.
• You must pass the Chapter 7 bankruptcy Means Test. You qualify for Chapter 7 bankruptcy if your income is less than the median income for a family of your size in your state.
• You cannot have had a prior bankruptcy petition dismissed within the past six months on account of failure to appear before the court or failure to follow court orders.

To learn more about Chapter 7 bankruptcy and receive free legal advice from a bankruptcy attorney, contact Fears | Nachawati today. You can email us or phone us toll-free at 1.866.705.7584.

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

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

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

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

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

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

You cannot be fired for filing for bankruptcy. Federal laws prohibit discrimination against employees based on that employee filing for bankruptcy. 

This protection is contained within Section 525 of the bankruptcy code, which states in part, “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or her been a debtor under this title…solely because such debtor is or has been a debtor under this title or has not paid a debt that is dischargeable in a case under this title.”

In fact, if you are fired because you file for protection under bankruptcy laws, you may be able to sue your former employer for your losses and damages.

If you are considering filing for bankruptcy, contact the attorneys of Fears | Nachawati today for free legal advice. To speak with one of our experienced bankruptcy lawyers, email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

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

Rebuilding a credit score after bankruptcy is not as difficult as one would imagine. While there is no silver bullet for improving your credit score, demonstrating a positive payment history and responsible credit management really comes down to common sense. With that in mind, below are some common sense ideas to help get you started:

First, pay your debts that survive the bankruptcy early every month. Certain debts may be non-dischargeable (e.g. student loans), and others may have been reaffirmed during the bankruptcy (e.g. a car loan). Pay these monthly debts religiously and early.

Second, obtain a secured loan from your local bank. Some banks and credit unions will help you rebuild your credit history by extending a small loan secured by collateral. In most cases that collateral is a cash deposit. For instance, you borrow $500 and deposit $500 with the bank as collateral to secure the loan. Each month you make monthly loan installments to the bank until the debt is paid (and your $500 deposit is returned to you). Make sure that the bank reports these on-time monthly payments to the credit bureaus. At the end, you not only have a positive credit history, but you have the beginnings of a good relationship with a local bank.

Third, obtain revolving debt. This is tricky because we are talking about credit cards here. In some cases a friend or family member may be able to add you as an authorized user to an existing credit card account. If the card holder is responsible with the monthly payments, the credit card company will report these payments as a positive payment history on your credit report.

A high interest credit card is also an option, but these cards are not advisable immediately after a bankruptcy as the terms and interest rates are horrific. Bankruptcy debtors are amazed at the number of credit card offers they receive after their bankruptcy discharge, so be judicious (and sensible!) in deciding which offers to accept.

Fourth, monitor your credit report and make sure that your on-time monthly payments are reported by your creditors. Debts that were discharged by your bankruptcy case may also reappear, so it is important to inspect your credit report from time-to-time to safeguard your score.

The goal of rebuilding your credit score is to demonstrate a history of responsible credit management. This requires time and effort. Remember that because of the bankruptcy on your record, your credit score is very fragile and requires vigilance and regular attention. Fortunately, with each month, and each on-time payment, your credit score will increase.  

Contact Fears | Nachawati today for free legal advice on bankruptcy. Email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

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

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

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

Due to the worsening economy, self-employed business owners facing a massive amount of debt have no place to turn. Filing for a Chapter 7 bankruptcy can help business owners save their home and other assets. It is important for business owners to be realistic about their financial situation before it’s too late. Business owners who file for Chapter 7 bankruptcy can get protection from existing debt, protect from lawsuits, foreclosures, seizures, bill collectors, judgment liens and tax liens.

With the assistance of an experienced bankruptcy attorney, business owners of an existing corporation might be able file personal bankruptcy and form a new corporation in order to stay in business. There are certain steps that must be taken to achieve that goal. Therefore, it’s important to have the assistance of a skilled bankruptcy attorney to help you get the most benefits under bankruptcy laws.

If you are a business owner who is considering bankruptcy, contact Fears | Nachawati toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com for a free consultation.
 

Why Chapter 7 bankruptcy?

As a result of the ever-declining economy, many small business owners are having to face the harsh reality that they will not be able to continue their business let alone pay off their Small Business Loan (SBA loan). Many small business owners have become aware that their best alternative is to file for Chapter 7 bankruptcy. By doing so, they are able to discharge their SBA loans. In many cases, they are also able to save their home and other possessions as well.

The truth about Chapter 7 and SBA loans

In the simplest terms, with the exception of student loans, most any loan issued by the government is subject to discharge. A common misperception about bankruptcy is that any debt associated with the government cannot be discharged in a bankruptcy filing.

Actually, the opposite is the truth. Most loans issued by the government or a municipality can be discharged in a bankruptcy case.

All the loans that could be governmentally issued, the broad majority of those loans are in fact, dischargeable in a bankruptcy filing.

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

One of the biggest concerns for people contemplating filing for a Chapter 7 bankruptcy is the possible effect bankruptcy may have when purchasing a home in the future. Most people think that a Chapter 7 bankruptcy will keep lenders from approving a home loan. But in reality the opposite is true.

What is Chapter 7 bankruptcy?

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

How soon after wards can I buy a home?

Most people qualify within1-2 years. Some factors that mortgage lenders will consider most important at the time you apply for a home loan will be your job, current credit status and down payment.

How to file

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

If you want to speak with a bankruptcy attorney regarding your options, contact Fears | Nachawati toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation. 

When you file for a Chapter 7 bankruptcy all collections by payday loan companies must stop due to an automatic stay. What this means is that they cannot continue to make harassing phone calls or continue attempts to cash any postdated checks you may have given them as promissory notes. They also cannot place a lien on your paycheck.

Of course, the Chapter 7 bankruptcy must be filed in order to have the automatic stay come into effect. Additionally, due to the known aggressive tactics by payday loans companies, it is advisable to speak with a bankruptcy attorney in order to make sure that the Chapter 7 bankruptcy application is filled out correctly.

Many people are also concerned about their ability to take out a loan in the future. Typically it is best to wait at least one year after your bankruptcy is discharged before you apply for any type of loan. In the meantime it is best to pay your bills on time to help raise your credit score and qualify for a loan with lower interest rate versus the high payday loan interest rates.

Contact law firm, Fears | Nachawati, to schedule a free consultation with an experienced bankruptcy attorney by calling toll free at 1.866.705.7584 or email us at  info@fnlawfirm.com to discuss your options for filing bankruptcy.

Like most people, you would think that it is crazy to spend more money in the current economy, especially if you are heavy in debt. Many people prefer to avoid creditors and their debt versus paying fees for a Chapter 7 bankruptcy. Unfortunately, what they do not realize is that some companies are very aggressive in collecting on past due debts through strong-arm collection tactics including liens on your paycheck and repossession of your vehicle. A Chapter 7 bankruptcy may give you the option to keep your vehicle and avoid or remove liens on your paycheck.

When you file for bankruptcy, all collection efforts from creditors on your salary or other assets and other debts will stop. What this means is that no creditor can makes calls or take any type of action to collect on any past due bills. It is probably the most cost effective way to get a fresh start. For more information, an experienced bankruptcy attorney can discuss your specific case to answer any questions that you may have.

If you are feeling the stress of too many bills and not enough money to pay your bills, then bankruptcy may be an option for you.  For a free bankruptcy consultation contact Fears | Nachawati, toll free at (866) 705-7584 or by e-mail at info@fnlawfirm.com.

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

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

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

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

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

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

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

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

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

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

·                     Filing bankruptcy on a new card;

·                     Taking a cash advance prior to filing;

·                     Charges for travel or vacation;

·                     A debt transfer from one card to another;

·                     Credit charges while unemployed; and

·                     Charges made after consulting a bankruptcy attorney.

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

Clients have many questions during the initial appointment with a bankruptcy attorney.  The most common concerns are losing property, and rebuilding credit after the bankruptcy case is over.  Occasionally someone will ask a straight-forward question: “Will filing a bankruptcy ruin my life?”  This powerful and important question deserves a straight-forward answer:

No!

The bankruptcy laws are widely misunderstood by the average American.  The purpose of bankruptcy is to put overwhelming financial difficulties behind and give an honest person a fresh start.  Many Americans have taken advantage of a fresh start to improve their lives and have made tremendous contributions to our society.  Perhaps the best way to illustrate the power of bankruptcy’s fresh start is to look at some famous examples:

Actor Burt Reynolds filed for bankruptcy in 1996 after his divorce from Loni Anderson. He listed more than $10 million in debt, and his dinner theater in Jupiter, Florida, was foreclosed on and his ranch was sold.  Never one to quit, Reynolds continues to act in movies and television.  Burt Reynolds was nominated for an Academy Award for Best Supporting Actor for his performance in the 1997 film Boogie Nights and won a Golden Globe Award for the movie.

Named as one of Time Magazine's "100: The Most Important People of the Century," business titan Henry Ford didn't always have the Midas touch.  By 1901 Ford had unsuccessfully managed his first automobile company into bankruptcy.  Two years later he founded Ford Motor Company.

Walt Disney may have had vision, but he needed a second chance to make the Happiest Place on Earth a reality.  After his first film company failed, Disney filed bankruptcy in 1923.  Five years later Disney introduced the world to Mickey Mouse and the Disney empire was born.

In 1875 a young businessman saw his horseradish company go bankrupt.  Undeterred, the young man formed a new company in Pittsburgh, PA with his brother and cousin making ketchup.  That company was a success for H.J. Heinz and in 2007 the H.J. Heinz Company had over $10 billion in revenue.

Other famous people who have used the bankruptcy laws to help them recover from financial difficulty include: singer Willie Nelson, talk show host Larry King, actress Kim Basinger, and even billionaire Donald Trump!

Don’t let financial difficulty stand in the way of your dreams!  Bankruptcy will not ruin your life; it is a tool to help you build a better future for yourself and your family.

Many people hesitate to hire a bankruptcy attorney is because they think that it will be very expensive. In actuality, the fees involved are not high and can save you thousands in the long run.

Many attorneys are very flexible in helping you get started in your bankruptcy. The cost of attorney fees varies widely depending on the issue surrounding your personal bankruptcy case. Some individuals have a basic Chapter 7 case while others have a complex Chapter 13 case that includes a home loan and IRS debts.

What needs to be considered carefully is that when you have a skilled, experienced bankruptcy attorney representing you in your bankruptcy you can save money on issues such as:

·         Discharge of debts

·         Exemptions for second mortgages

·         Assistance in stopping creditors take collection action against your assets

Additionally, it is crucial that the bankruptcy forms are filled out appropriately so that the bankruptcy trustee will not object to your proposed payment plan or debts to be discharged in your petition.

For more information on how to get started with your bankruptcy petition and for a free bankruptcy consultation contact law firm, Fears | Nachawati, by calling toll free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

For updated information on filing fees visit http://www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

You will be able to get a student loan after you file for bankruptcy, but you will have to wait until your bankruptcy is discharged. Depending on whether you file for Chapter 7 or Chapter 13 bankruptcy, it can be 6 months-5 years. For obvious reasons, a bankruptcy trustee will probably not allow you to take on new debt while your bankruptcy is pending.
The length of time you must wait also depends on the type of student loan you plan to apply for. In the case of government funded student loans, your credit history (including bankruptcy) is irrelevant. It may be more challenging you have to get private students loans, but not impossible by any means.

The ability to get student loans in the future should never be an impediment to your decision to file for bankruptcy. While an education is always best in the long run, you should carefully consider your current financial situation and what is in your best interest. When you file for bankruptcy you are erasing debts and able to start off fresh.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com to discuss your options for filing bankruptcy.

Currently mortgage modification is a very hot topic. It is being seen as an alternative to foreclosure or bankruptcy. Briefly, a loan modification is a process by which the bank modifies the terms of a borrower’s mortgage to lower the monthly payment. The bank can change a person’s interest rate, reduce the principal balance of the overall amount owed and extend the amount of time a person has to pay off the loan (up to 40-50 years). These are some of the ways in which the lender reduces a borrower’s monthly payment to an amount in which they can afford as opposed to foreclosing. Sounds simple enough but as many people find out, dealing with a mortgage servicer takes much time and patience. Most of the time, you will have a hard time reaching them or they will not return your call.

Without legal representation you are basically at the mercy of the mortgage holder. If you are having trouble with your mortgage, an attorney skilled in loan modifications can help:

• Lower your interest rate to a payment you can afford
• Stop foreclosure
• Obtain a principal forbearance
• Change the terms of an option ARM mortgage

If you are a resident of Fort Worth, Dallas, Arlington, Garland, Rowlett, Mesquite and Plano contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for more information on home loan modifications.

Many people who are in over their heads with credit card debt are basically “Robbing Peter to pay Paul”. For example, many people who are out of work may be taking large cash advances to pay other debts. But in the end the credit card bill with the cash advance shows up and there is not enough money to pay it, so another credit card is used to pay that bill. It’s a merry go round that is very difficult to get off.

Many Dallas residents end up going through their savings account and putting themselves in heavy debt without realizing that they have a perfectly legal option such as filing for Chapter 7 bankruptcy. Some of the advantages of filing for a Chapter 7 bankruptcy:

• You do not have to make payments to creditors
• Creditors can not take action against you (liens on paycheck or bank account)
• Harassing phone calls must stop immediately
• All debts will be discharged

If you are a resident of Fort Worth, Dallas, Arlington, Garland, Rowlett, Mesquite and Plano, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for more information how Chapter 7 can help you get a fresh start.

On May 22, 2009, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act.  This new legislation is intended to reform how

credit card companies deal with its customers. According to the White House,

”Just for starters, it bans unfair rate increases, prevents unfair fee traps, requires plain language in plain sight for disclosures, increases accountability all around, and institutes protections for students and young people.”

And while this is definitely a step in the right direction, it does not protect consumers who are in serious credit card debt at this moment. Most people are weighing basic necessities over paying a credit card bill. Even if you once had the recommended 6-month savings in your bank account, we have been in recession far longer than that.

In the meantime, the credit card bills continue to come, with late and over the limit fees for some. As a result, the bill does not get paid and the harassing phone calls and threats from the credit card companies begin to occur. If this is the case, filing for bankruptcy may be a good resolution to your credit card problems. It will help give you a fresh start and stop any collection actions by the credit card companies against your assets or paycheck.

If you are looking for a step in the right direction, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com 'for a free bankruptcy consultation.

One of the most embarrassing and inconvenient things that can happen in a household is to have the utility power suddenly turned off. Unfortunately, it can and does happen when someone gets behind in their utility bill and fails to make payment arrangements with the utility company. It can also happen when you are too far behind and cannot catch up. At that point the utility company can only extend past due payments for so long and at an amount that you will not be able to realistically afford.

If you are in this scenario, chances are that you are also behind in other bills. A good option may be to file for bankruptcy. By filing for bankruptcy in Fort Worth the electric company cannot refuse or cut off service. But, the utility company can require a deposit for future service and you will also have to pay bills that arise after bankruptcy is filed.

A bankruptcy lawyer in Fort Worth can go over more specific details case by case, as everyone’s financial situation is unique.

If you are feeling the stress of past due utility bills and not enough money to pay them, then bankruptcy may be a good solution for you.  For a free bankruptcy consultation contact Tarrant County bankruptcy law firm, Fears | Nachawati Law Firm, toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.