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

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.

You know that bankruptcy can reduce your debt and give you a fresh financial start, but how do you know when it’s time to take the first step and contact a bankruptcy attorney? Here are 11 signs that it may be time for you to consider filing bankruptcy:

1. You can barely afford the minimum monthly payments on your credit cards.
2. You have taken, or are considering taking, cash advances or payday loans to meet your basic living expenses.
3. You are losing sleep over not being able to pay your bills.
4. Stress over your financial difficulties is negatively affecting your health.
5. You are living paycheck to paycheck with no reserve funds for an emergency.
6. You are afraid to answer the phone or go to your mailbox.
7. You are taking cash advances on one credit card to make payments on another one.
8. You are considering cashing out your retirement savings to pay your bills.
9. Your debt is increasing rather than decreasing every month.
10. You’re behind on your rent or mortgage payments.
11. Your car is about to be repossessed.

If the above statements describe your current financial situation, then take charge of your life and learn about your options. Contact a bankruptcy attorney today to find out if bankruptcy is the right solution for you. The sooner you act, the sooner you can get your life back.

The fear of losing property stops many people from exploring their options in bankruptcy. The fact is that only four percent of chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor. For the other 96% of chapter 7 cases, the debtor continues to pay secured debts, like a house or car, and is able to keep the property.

Determining whether a debtor has an asset case is a simple arithmetic calculation using bankruptcy law exemptions. Bankruptcy exemptions are provided by state law. Every state grants exemptions so that the debtor can retain property, like home equity, a modest vehicle, some personal property, and household furnishings.

The homestead equity exemption can vary greatly from state to state. Some states grant an unlimited homestead exemption to their residents (which the federal law may limit in some circumstances), and other states do not offer much protection. Ohio, for instance, only provides a $5,000 exemption, while Kansas gives its residents an unlimited exemption.

The motor vehicle exemption generally allows the debtor to exempt equity in one (sometimes more) personal vehicle. The exemption can vary greatly by state, usually ranging from $2,000 to $10,000.

Every state grants an exemption for basic household furniture.  In addition, most states give an exemption for tools used for work, musical instruments, etc.

Many states provide a wild card exemption to exempt miscellaneous items. This wild card exemption can be used to protect otherwise non-exempt equity in a vehicle or home. Generally it is used to protect cash money in the bank.

Identifying your property, determining its value, and applying your exemptions is the difference between retaining and losing property in a bankruptcy case. An experienced bankruptcy attorney can guide you through this process.

For free legal assistance from a Texas bankruptcy lawyer, contact the law firm of Fears | Nachawati today. You can email us or phone us toll free at 1.866.705.7584.

There is a common myth that gambling debts cannot be discharged in bankruptcy. The truth is that gambling debts usually receive the same treatment as any other unsecured debt, like credit cards or medical bills. However, under some unusual circumstances, a bankruptcy court may find that a gambling debt cannot be discharged.

Gambling debts commonly appear as credit card charges or cash advances. An important factor in the discharge of this debt is whether there was an intent to repay the debt when the charge or advance was incurred. If the debtor had no intent to repay the obligation, the credit card company may object to the discharge of this debt on the basis of fraud. Courts have generally been reluctant to listen to this objection by a creditor unless there is strong evidence of fraud. For instance, a debtor who takes out a $10,000 cash advance at the casino, even though he is recently unemployed and overwhelmed by debt, and who files bankruptcy the next day will likely have the hall-marks of fraud.

Most gambling debts in bankruptcy are not as cut and dry as the above example. If the credit card company objects, the bankruptcy court will hold a hearing. The court may look to the debtor’s past credit card transactions, any attempt to repay the obligation, and the records and testimony of the debtor to determine the existence of a fraudulent intent.

All gambling losses must be disclosed by the debtor on the Statement of Financial Affairs. This disclosure is a mandatory requirement and the intentional failure to disclose this information may result in a finding that the gambling debt cannot be discharged, or worse, the court may deny any discharge in the case as a result of the debtor’s misrepresentation. It is particularly important to disclose recent gambling losses to your attorney prior to the filing of your bankruptcy case. Recent credit card charges or cash advances can be problematic to any bankruptcy case; and especially troublesome if related to gambling debt.

Bankruptcy courts can be very forgiving to the honest, although perhaps foolhardy debtor, and very unsympathetic to the dishonest. Honesty and full disclosure is especially important in a case involving gambling debts. Discuss these debts with your bankruptcy attorney and provide all the requested documentation. The success of your bankruptcy case depends on it!

For free legal advice on gambling debt and other bankruptcy issues, contact the Texas bankruptcy lawyers of Fears | Nachawati today. You can 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.

Payday loans, also known as cash advances, are short-term loans made at a high interest rate. Payday loans are typically made for a relatively small amount of money, but because of the high interest rate, the debt can quickly spiral out of control.

In most cases, payday loans are dischargeable in Chapter 7 bankruptcy. Payday loans are a form of unsecured debt, and virtually all unsecured debts are discharged in Chapter 7 bankruptcy.

For free legal assistance with Chapter 7 bankruptcy, contact the bankruptcy lawyers of Fears | Nachawati today. To speak with one of our Texas bankruptcy attorneys, email us or call our toll free number at 1.866.705.7584.

Under a 1992 decision by the U.S. Supreme Court called Dewsnup v. Timm, a second mortgage or lien stripping can only be accomplished in a Chapter 13 bankruptcy. Chapter 13 is intended for people with regular income or earnings to pay back a portion of their debts over time approved by the bankruptcy court.

In the Northern District of Texas, the process begins by filing a petition for Chapter 13 bankruptcy. You must also file a plan with the court to repay creditors all or part of the money that is owed to them using your future income. Depending on your income a repayment plan can take three or five years. In order to remove an unsecured second mortgage, the fair market value of the home must be less than the balance owed on the first mortgage.

The plan must be approved before it can take effect. If the bankruptcy court grants the motion, it will issue an order directing the holder of the second deed of trust to remove the lien from the home. The type of loan you hold does not matter during this process.

For a free consultation to see if you qualify for the removal of a second mortgage on your home, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com.

Reaffirming your debt after you have filed for bankruptcy means that you are agreeing to repay a certain debt that would have otherwise been discharged. You sign a debt reaffirmation agreement, reaffirming to your lender or creditor that you will repay your debt. In return, you are allowed to keep the property that is the subject of the debt.

Normally, when you file for bankruptcy, creditors of your secured debts can treat the bankruptcy as a default and therefore repossess their collateral, such as a car. While there are property exemptions applicable to bankruptcy cases, the only sure way to retain a piece of property is to reaffirm the debt.

That does not mean, however, that reaffirming your debt is always a good idea. If you fail to make your payments, not only can your creditor repossess your property, but you are also still responsible for the balance of the debt.

Whether or not you should reaffirm a debt is a matter of deciding how badly you want to keep the property and whether you will be able to afford to make the payments. An experienced bankruptcy attorney can assess your situation and help you decide whether it is a good idea to reaffirm your 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.

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.

Residents living in Texas are subject to wage garnishment by the IRS. The IRS commonly uses wage garnishment as a way to collect taxes and penalties that are owed. A wage garnishment requires an individual’s employer to withhold a portion of the taxpayer's pay each period and send it to the IRS. In most cases, the individual is not left with enough money each month to pay basic living expenses. A wage garnishment will remain in effect until the taxes and penalties owed are paid in full or until a wage garnishment release is issued.

The only other time the wage garnishment can be stopped for a debt to the IRS (or any  other creditor) is to file for bankruptcy. When you file for bankruptcy, an automatic stay is put in effect. This means that all garnishments, liens or other collection activity by the IRS and creditors will stop immediately. In some cases, you may even be able to get back some of the wages that were garnished.

For more information on how a bankruptcy can help you put an end to wage garnishment, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com.

For families in financial difficulty, sometimes paying for even the most basic things is a struggle. Fortunately, the bankruptcy code protects debtors from the disconnection of necessary utilities like water, electricity or gas services. Specifically, a utility company may not alter, refuse, or discontinue service to an existing customer solely because either (1) the customer filed for bankruptcy protection; or (2) the customer failed to pay a pre-petition debt to the utility.

However, this protection is limited. Within 20 days after the bankruptcy filing the debtor must give the utility company "adequate assurance of future payment." This assurance is usually in the form of a new security deposit. The law allows the utility company to keep any previous security deposit and apply that deposit to your prior bill. The amount of the new security deposit is negotiated between the parties, but can be decided by the bankruptcy court if no agreement is reached. If the debtor does not provide "adequate assurance of future payment" within the 20 day time period, the utility provider may discontinue services.

A few years ago the Fifth Circuit Court of Appeals decided that a cable television provider is not a utility service for purposes of the bankruptcy code. In issuing its decision, the Court said:

“This section is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier, or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility.”

By analogy internet and cell phone services would not be considered utilities by the bankruptcy courts.

If your family is overwhelmed by debt and facing a utility disconnection, consider bankruptcy as a way to "keep the lights on" and provide some relief. An experienced bankruptcy attorney can explain how the bankruptcy code can prevent a utility disconnection and stop all creditor collection action.  Call Fears | Nachawati today for a free consultation by dialing toll free 1-866-705-7584 or e-mail us at info@fnlawfirm.com. 

A Chapter 7 bankruptcy discharge releases an individual from personal liability for most debts and prevents creditors from taking collection action against the debtor.  In other words, the bankruptcy discharge is a legal injunction prohibiting the creditor from collecting against you personally.  There are a few circumstances in which a debt may “survive” the bankruptcy and be enforceable against the debtor.  The most common is a voluntary process known as “reaffirmation.”

A reaffirmation is an agreement that continues the debtor’s obligation on a debt, even though the debt would otherwise be discharged in the bankruptcy.  Usually these agreements concern property with a lien attached (e.g. a car) and the creditor agrees to not repossess the property as long as the debtor continues to pay the debt.

The decision to reaffirm a debt should not be made lightly.  A reaffirmation agreement must be made in writing before the discharge is entered.  It must be filed with the bankruptcy court and the debtor must include a statement of current income and expenses that demonstrates sufficient income to repay the debt.  The debtor’s attorney certifies that the debtor has been advised of the legal effect and consequences of the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor's dependents.

Sometimes a reaffirmation agreement is not in the debtor’s best interest.  For instance, many co-signed unsecured loans that the debtor perceives a moral obligation to repay can be paid without a reaffirmation agreement (and without a subsequent legal obligation).  As you can see, reaffirmation agreements can be complicated and should be carefully considered.  Fortunately, the bankruptcy laws provide many options and tools for solving difficult financial problems. 

If you are considering a reaffirmation agreement to continue paying on a debt, seek the advice of an experienced bankruptcy attorney.  Contact Fears | Nachawati for a free consultation to discuss your options by calling toll free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

When you file for bankruptcy you can stop harassment, foreclosures, repossessions and lawsuits and be allowed to keep your home, your car, assets and wages. In order to better understand your bankruptcy options, we will take a look at the two most common bankruptcy options for individuals:

Chapter 7

In a chapter 7 bankruptcy case the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay creditors. Part of the debtor's property may be subject to liens but will allow the debtor to keep certain "exempt" property.  A trustee may liquidate the debtor's remaining assets therefore when you file for a Chapter 7, you may lose property. Once the debts are discharged, a debtor is no longer obligated to pay them.

Chapter 13

A chapter 13 bankruptcy is also known as a wage earner's plan because it enables individuals who can provide proof of a regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years that is dependent on the debtor’s income. Payment plans cannot exceed a period longer than five years. During this time the law forbids creditors from any form of collection effort.

For more detailed information on your bankruptcy options contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation.

If you are contemplating filing for bankruptcy you may be wondering how it will affect your job. This is understandable because while you do want to get rid of your debts, you do not want to lose your job. The good news is that you cannot get fired for filing bankruptcy because federal law prohibits an employer to discriminate against you for declaring personal bankruptcy.

Your constitutional rights protect you from being fired for filing bankruptcy. In fact, it is a violation of your rights, not to mention a crime, to fire someone for filing bankruptcy.

If anything, once your debts are discharged through a Chapter 7 bankruptcy or a proposed payment plan is approved through a Chapter 13 filing, you will sleep better, feel less stressed and will be able to better concentrate at work.

Additionally, if creditors are threatening you with liens, it may be a wise step to file for bankruptcy to freeze any type of collection action against your paycheck.

Contact bankruptcy law firm, Fears | Nachawati, by calling us toll free at 1.866.705.7584 or e-mailing us at info@fnlawfirm.com to find out how bankruptcy can help you get rid of debts.