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

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.

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.

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.

A reaffirmation agreement is a new contract between a debtor in bankruptcy and a creditor in which the debtor agrees to continue personal liability on a secured loan and the creditor agrees to not repossess the property. Reaffirmation agreements are only available to Chapter 7 debtors and the agreement must be executed before the bankruptcy discharge is entered. The debtor can revoke the agreement with 60 days after the agreement is signed.

Reaffirmation agreements are typically used to continue payments on secured property the debtor wishes to retain, like a car or house. A debtor that reaffirms a debt is personally liable for any subsequent default on the loan, and can be sued by the lender and the property may be repossessed. This is a serious consideration since the debtor is not eligible for another Chapter 7 bankruptcy discharge for eight years, and is not eligible for a Chapter 13 discharge for 4 years.

The Bankruptcy Code requires that the agreement contain many disclosures concerning the contract terms. The debtor must also file a statement of current income and expenses. If the debtor’s income after expenses is not enough to pay the monthly loan, the court may decide to not approve the reaffirmation agreement. The debtor’s attorney must also certify to the bankruptcy court that the debtor was advised of the legal effect and consequences of the reaffirmation agreement, and that the reaffirmed debt will not create an undue hardship for the debtor or the debtor's family.

Since reaffirmation agreements are new contracts, the parties are able to change the terms of the original agreement. This could mean a reduction of principal, interest, or a change in payment length in order to make the monthly payments more affordable to the debtor. While the reaffirmation process is a voluntary process, the creditor is generally not anxious to repossess the property, and the debtor usually has more leverage in bankruptcy to negotiate a better deal with the creditor.

If you are considering a bankruptcy and a secured car or house loan, discuss your individual situation with an experienced bankruptcy attorney. There are many options to retain property both during and after bankruptcy. Your bankruptcy attorney can help you select the best course of action.

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

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

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

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

For free legal advice about Chapter 13 bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

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

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

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

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

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

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

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

The nine part video series includes the following topics:

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

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

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

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

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

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

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

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

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

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

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

It is not uncommon for homeowners who file for bankruptcy also have past due HOA fees or even a lien on their property. Many homeowners also complain how stubborn and inflexible the Home Owners Association (HOA) Board of Directors and the HOA attorney are with any type of payment arrangements. When you file for bankruptcy, an automatic stay will be put into place and any collection effort by the HOA needs to stop. That includes HOA liens as well.

If you file a Chapter 13 bankruptcy, all past due HOA fees will be included in your repayment plan. For those who file a Chapter 7 bankruptcy the process is a bit more complicated. The HOA fees may be turned into unsecured debt which may mean you will not have to repay most or any of the HOA past due fees.

Although most HOA liens do survive bankruptcy you can avoid losing your home through foreclosure by overzealous HOAs when you file for bankruptcy. It is advisable to consult with an attorney when dealing with HOAs as most are very aggressive and inflexible regarding HOA fees and placing a lien on your home.

For more information on stopping HOAs in their tracks through bankruptcy, contact bankruptcy law firm, Fears | Nachawati, by calling toll free at 1.866.705.7584 or emailing us.

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.

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

What is Chapter 7 bankruptcy?

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

How soon afterwards can I buy a car?

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

How to file

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