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 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.

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.

A Chapter 13 bankruptcy is a repayment plan that lasts three to five years. During that time the debtor is required to devote all disposable income to the repayment of debt. Most bankruptcy trustees and courts consider tax refunds part of the debtor’s disposable income that is over-withheld and should be paid into the Chapter 13 plan. However, instead of reducing the amount payable under the debtor’s plan, tax refund money is paid to unsecured creditors that would otherwise not be paid. If the debtor is paying a 100% repayment plan, the trustee will not request turnover of any tax refunds.

Some courts have approved a provision in the Chapter 13 plan that requires the Internal Revenue Service to forward any tax refund to the trustee’s office. However, at least one bankruptcy court has found this practice to be unlawful. In United States v. Carroll, No. 2:09-cv-13505 (E.D.Mich. Jan. 20, 2010), the bankruptcy court concluded that the IRS was not a party to the debtor’s chapter 13 case and did not have an opportunity to object to the plan. Additionally, as a part of the United States government the IRS possesses sovereign immunity that it did not waive.

Keeping your money and avoiding an income tax turnover may be as simple as adjusting your paycheck withholding. By speaking to a tax professional you may be able to predict your tax liability and put more money in your pocket each payday. However, be careful to avoid a situation where you do not withhold enough taxes and end up with a large tax bill at the end of the year.

If your tax refund is largely due to an Earned Income Tax Credit (EITC), the IRS allows tax payers to request an advance payment of the EITC. Information regarding this advance payment program can be found on the IRS website.   If you qualify, your employer will add additional money to your take-home pay each paycheck.

If you want to avoiding surprises during your Chapter 13 bankruptcy, seek out and hire an experienced bankruptcy attorney. An experienced bankruptcy attorney can discuss your financial situation with you and help you keep your hard-earned money for your family.

In order to be confirmed, a Chapter 13 repayment plan must meet the Best Interest Test.

The Best Interest Test is found in Section 1325(a)(4) of the bankruptcy code. It requires that your unsecured creditors receive at least as much under the Chapter 13 repayment plan as they would have under a Chapter 7 liquidation. Essentially, the goal is to make sure that your creditors are no worse off under Chapter 13 bankruptcy than they would have been under a Chapter 7 bankruptcy.

To understand how the Best Interest Test works, you must first understand how a Chapter 7 liquidation works. In a Chapter 7 bankruptcy, your nonexempt property is liquidated and sold. The proceeds from the sale are used to pay back as much of your debt as possible.

When you file for Chapter 13 bankruptcy, a hypothetical Chapter 7 liquidation is performed to determine how much your creditors would have received. The amount they receive under your Chapter 13 repayment plan must be at least equal to this amount.

Quite often a debtor is determined to have no assets, so the unsecured creditors would have received nothing under a Chapter 7 liquidation. Of course, this does not actually mean that the debtor has no assets at all. Rather, it means that the assets the debtor does have are all protected from liquidation through exemptions.

In these cases, it is proper for the debtor’s unsecured creditors to receive nothing under the Chapter 13 repayment plan, and the plan will be approved provided that it is offered in good faith and passes the disposable income test.

A lot can happen during a Chapter 13 repayment plan which generally lasts three to five years. Sometimes large debts are incurred that the debtor is unable to pay. Fortunately, a Chapter 13 debtor is able to discharge a post-petition debt, but only after certain prerequisites are met.

First, the debtor must amend the repayment plan to provide for a post-petition debt. Second, the debtor must usually obtain the approval of the bankruptcy trustee prior to incurring the debt. This is not always obtainable, especially in the case of a large medical bill. Third, the creditor must voluntarily choose to file a proof of claim. And finally, the claim must either be a tax claim, or a claim for a consumer debt necessary for the completion of the debtor’s plan.

A common situation in which post-petition debts arise in a Chapter 13 case is where the debtor needs to purchase a different automobile. Repaying a post-petition car loan through a Chapter 13 plan is easily accomplished through coordination and cooperation from the trustee, the lender, and the court. The lender agrees to be paid by the trustee, the trustee agrees to sanction the debt, and the court approves the amended plan allowing the lender to be paid through the bankruptcy plan. 

In some cases it may not be practical to include a post-petition debt in the debtor’s Chapter 13 plan. In that case, the debtor may elect to convert the Chapter 13 case to one under Chapter 7. The Bankruptcy Code states that a debt that arises after the Chapter 13 filing date, but before the debtor’s conversion to Chapter 7, is to be treated as a pre-petition debt. The Chapter 13 restrictions and requirements listed in the preceding paragraph do not apply to debts in a conversion case. 

The Bankruptcy Code contains many flexible options for reorganizing your finances and dealing with your creditors. Even when there is an unexpected event that results in a debt, your bankruptcy attorney can provide you with choices for dealing with a post-petition debt.

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.

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.

It’s a vicious cycle: You lose your job, causing you to fall behind on your mortgage, car payments and other bills. As a result, your credit suffers. You finally land an interview with good prospects, but a credit check costs you the job.

You need employment to improve your finances, but it’s your finances that are holding you back from employment.

Some legislators are taking steps to prevent this situation from occurring. Recently a House bill was introduced that would prohibit employers from using consumer credit checks to make adverse employment decisions.

The Equal Employment for All Act (H.R. 3149) would amend the Fair Credit Report Act and prohibit employers from making hiring decisions based on an applicant’s consumer credit report. The Act makes exceptions for financial firms, government agencies and jobs that require certain security clearances.

The bill was introduced by Representative Steve Cohen from Tennessee. According to Cohen, the bill would provide some of our country’s “most vulnerable, ‘credit challenged’ citizens” the chance to start rebuilding their credit by getting a job.

Supporters of the bill do not believe that a person’s credit history is a reflection of how they would perform on the job. Critics of the bill, however, point to the vulnerability of small businesses to employee theft, citing the bill’s limited exceptions as a cause of concern.

To read more on the Equal Employment for All Act, click here for the complete article from the U.S. News and World Report.

Regardless of whether the bill passes, one thing remains certain: an experienced Texas bankruptcy attorney is the best source of advice for consumers facing credit difficulties. A Texas bankruptcy lawyer can explain your options and help you make decisions that will get you back on the road to financial stability.

Yes. You will have to attend a hearing called the First Meeting of Creditors. This meeting takes place about 30 to 40 days after you file for bankruptcy and is required for both Chapter 7 and Chapter 13 bankruptcy.

The bankruptcy trustee presides over this meeting, and during the hearing the trustee will ask you questions about your assets, debts and other matters related to your bankruptcy filing.

After the trustee is finished asking their questions, your creditors are allowed to ask you questions as well. It is rare, though, for creditors to actually show up for this meeting.

In most cases, you will not have to return to court after this hearing is over. However, if a creditor files a motion or initiates an adversary action, you will likely have to go to court again.

Don’t worry. You do not have to go to court alone. If you hire a Texas bankruptcy attorney, they will be there to represent you during all of your court appearances.

To receive free legal advice on bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Are you in financial distress? Is it also causing you health problems?

A 2008 health poll by the Associated Press and AOL found that people in financial distress are more likely to report health problems, including “serious” health problems like ulcers, severe depression, and even heart attacks. Individuals reported the following health problems related to debt stress during the poll:

• 44 percent had migraines or other headaches, compared with 15 percent of those with low levels of debt stress;
• 29 percent suffered severe anxiety, compared with 4 percent;
• 27 percent had ulcers or digestive tract problems, compared with 8 percent;
• 23 percent had severe depression, compared with 4 percent; and
• 6 percent reported heart attacks, twice the rate of those with low debt stress;

More than half, 51 percent, reported muscle tension and/or lower back pain compared with 31 percent of those with low levels of debt stress. Those individuals with high debt-related stress also reported trouble concentrating and sleeping.

This information is neither new nor surprising. In 2005 researchers at three major universities surveyed three thousand people regarding the negative effect of financial stress and found that the top three health effects of financial distress are stress, anxiety, and depression. Anyone who works with individuals in debt on a regular basis sees the negative physical effects that debt stress can have.

Financial distress can negatively impact many areas of your life including your health. Take charge of negative financial stress today and do something to improve the quality of your life. An experienced bankruptcy attorney can evaluate your situation and give you legal advice that can lead to a fresh financial start. 

To receive free legal assistance from a Texas bankruptcy lawyer, contact Fears | Nachawati today. You can 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.

Typically student loans are not discharged in bankruptcy. In order to have your student loans discharged, you must be able to show that repaying your student debt will impose an “undue hardship” on you and your dependents.

It is difficult, but not impossible, to make this showing. However, you generally will not be able to prove undue hardship unless the court finds that you are physically unable to work and have no chance of gaining future employment.

In order to have your student loans discharged, you must file a separate motion and present your case to a judge. Both privately funded and federally funded student loans are treated the same way.

For free legal advice on bankruptcy, including the effect of bankruptcy on student loans, contact Fears | Nachawati today. To speak with one of our experienced bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

One of the main criteria that determines whether you are eligible to file Chapter 13 bankruptcy is the amount of debt you currently have. To be eligible to file Chapter 13 bankruptcy, you must have less than $336,900 in unsecured debt and less than $1,010,650 in secured debt.

In order to file for Chapter 13 bankruptcy, you must also reside in the United States and have a regular income. Specifically, you must be able to show the court that you have sufficient income to meet your repayment obligations. Additionally, you must have received credit counseling within the preceding 180 days.

Other criteria that must be met in order to file for Chapter 13 bankruptcy are:

• You must not have been granted a Chapter 7 bankruptcy discharge in the past 4 years.
• You must not have been granted a Chapter 13 bankruptcy discharge in the past 2 years.
• You cannot have had a bankruptcy petition dismissed within the past 180 days because of failure to appear before the court, failure to comply with a court order or a voluntary dismissal after your creditors tried to recover property through the bankruptcy court.
• You must have filed both your federal and state income tax returns for the four years preceding your bankruptcy filing date.

To find out if you are eligible to file for Chapter 13 bankruptcy, contact the bankruptcy attorneys of Fears | Nachawati today. To receive free legal advice on bankruptcy, email us or phone us toll free at 1.866.705.7584.

The simplest way to explain unsecured debt is to describe it as debt that is not “secured” by any property or collateral. That means that debt cannot cause a lien against your property and that your property cannot be taken away from you in order to pay the debt. Examples of unsecured debt include debts from credit cards, personal loans, medical bills, and even cell phone bills.

In other words, the credit card company cannot take your purchases back as payment for your overdue bill or place a lien on your home. Unsecured creditors usually try to get paid through many aggressive tactics, including the use of collection agencies, constant letters and phone calls, but they really have little legal recourse in getting this debt paid back. But they have the power to report delinquent payment that will affect your credit rating.

An option to stop the harassment and to get a fresh start is to file for a Chapter 7 bankruptcy. When you file for a Chapter 7 bankruptcy most, if not all, of your unsecured debt will be canceled when your case is discharged. Once your Chapter 7 case is discharged, all remaining unsecured debts will be erased.

It is important to note that by filing a Chapter 7 bankruptcy, some of your property might be sold to pay off some unsecured debts. Additionally, if you are behind in your mortgage or car payments, your home or car may be repossessed by the mortgage company that financed the loan, but they can’t be sold to cover your unsecured debt. For more information on how to save your home through bankruptcy it is best to consult with an experienced bankruptcy attorney in your local area.

For a free consultation on getting rid of unsecured debt, contact bankruptcy law firm, Fears | Nachawati, by calling us at toll free 1.866.705.7584 or send an e-mail to info@fnlawfirm.com.

During bankruptcy a debtor is required to reveal all assets and give an estimated value of the property. When the asset is cash money or an investment, figuring its value is easy. In other cases nailing down a value can be very elusive. This is especially true when dealing with a unique or expensive household item. So how does the bankruptcy trustee expect the debtor to come up with a value for household property?

To understand how to value household property for bankruptcy purposes, it is important to understand the bankruptcy process. One of the chief functions of the bankruptcy trustee is to uncover assets for the benefit of creditors. Federal and state laws allow the debtor to keep certain modest items of household property that are considered “necessary,” like clothing and household items, but only up to a certain dollar amount. That amount is called an “exemption,” and that property is considered “exempt” and protected from a creditor’s collection remedies. Any property that is worth more than the allowed exemption amount is subject to be liquidated, usually at auction.

So the easy answer to how household property should be valued is, “At auction prices.” Since auction prices can vary, that doesn’t really answer the question at all. Instead, what most bankruptcy trustees suggest is to set a price like you would at a yard sale. Additionally, internet resources like eBay can be helpful to determine the quick-sale market value of a unique item. Using one of these on-line resources can provide good evidence that your new-in-box Barack Obama Chia Pet is only worth $20.00.

Many used household items, like common dinner dishes or bedding, have little or no value. On the other hand, a grandfather clock, piano, or gun safe usually has some value. A bankruptcy trustee is not in the used furniture business, and will usually incur significant costs in selling a debtor’s property. Consequently, the trustee will not be interested in your household property unless you own a non-exempt item that can be sold for a substantial profit to the bankruptcy estate. 

As owner of your property, you are entitled to give an opinion regarding its value. It is important not to under-value or over-value your household property, but instead give a fair and reasonable estimate. If you own an expensive household, do some research and speak to your bankruptcy attorney. There are many ways to protect property in bankruptcy and your bankruptcy attorney can help you decide on the best course of action.

For free legal assistance from an experienced bankruptcy attorney, contact Fears | Nachawati. To receive your no charge legal consultation, email or call us toll free at 1.866.705.7584.

One of the principle aims of the U.S. bankruptcy laws is to give an honest debtor a "fresh start." It is important to know how bankruptcy will affect your financial life, during and after your bankruptcy case. An experienced bankruptcy attorney can guide you through the process, and get you the relief that you need, but what then? What happens after the bankruptcy court issues your discharge, your case closes, and your bankruptcy attorney sends you a nice letter wishing you well in the future? It is important to know what to expect after your bankruptcy ends, and how you can get that "fresh start."

There is actually quite a bit of confusion surrounding when a bankruptcy can no longer be reported on your credit report. Some sources say ten years, others say ten years for a chapter 7 and seven years for a chapter 13. The law is actually very clear. The Fair Credit Reporting Act ("FCRA") directs credit reporting agencies to exclude bankruptcy case information from all consumer reports ten years after “the date of entry of the order for relief.” The FCRA does not distinguish between chapter 7 or chapter 13. However, many credit counselors cite an "unofficial policy" of the three largest credit reporting bureaus (Experian, TransUnion, and Equifax) that removes a chapter 13 filing from your credit report after seven years.

Many individuals (and some credit experts!) are also confused over when the FCRA's ten year bankruptcy clock starts. Some say the information must be removed ten years after the date of the discharge. Section 301 of the bankruptcy code states that the “order of relief” date is the filing date, so the ten year period is measured from the bankruptcy filing date, not the discharge date. Information about your bankruptcy must be removed from your credit report not later than ten years after the date you filed the case. If you file on January 1, 2010, the bankruptcy must be removed before January 1, 2020.

Knowing what to expect during and after your bankruptcy case can help you plan for the future. Do not be bashful about asking your bankruptcy attorney questions, and make the most of this fresh start opportunity.

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

As consumers venture out shopping for gifts this holiday season, many will be surprised by the number of stores that have gone out of business since last Christmas. Many shopping favorites have closed their stores for good, including Linens N’ Things, Goody’s, Mervyns, KB Toys, Sharper Image, and Circuit City. However, many stores like Circuit City and Linens N’ Things have filed a business bankruptcy, but are still selling on-line.  This kind of restructuring through a business bankruptcy is not unusual in today’s economy. Shrewd businessmen like Donald Trump know the power of the federal bankruptcy laws. In fact, Mr. Trump has seen his businesses file, and emerge from, bankruptcy several times.

According to the Wall Street Journal, business bankruptcies are up 16% from last year, and number 74,832 filings through October. For many retailers, the holiday season is a make-or-break time of and will do what they can to attract shoppers. For instance, BusinessWeek reports that Sears, Amazon.com, and Wal-Mart are invoking Black Friday deals weeks before Thanksgiving and retailers are planning to offer more holiday promotions and discounts this holiday season.

The federal bankruptcy laws have helped retailers keep their stores open.  Eddie Bauer and Mrs. Fields Cookies are two well-known businesses that recently filed chapter 11 bankruptcies to reorganize finances, get a breathing spell from creditors, and continue operating. Chapter 11 of the bankruptcy code is a reorganization bankruptcy, usually used by a corporation or partnership. In a chapter 11 the debtor proposes a plan to keep its business alive and pay creditors over time.  An individual can also file a chapter 11 bankruptcy, but usually opts for filing under chapter 13 or 7.

If you are struggling with bills you can’t pay, you are not alone. Many businesses and individuals are hurting during this recession period. The good news is that the federal bankruptcy laws have helped millions of individuals and businesses get back on their feet, and it can help you too! 

Speak with an experienced bankruptcy attorney and learn how you can get relief and a fresh start in your financial life. For free bankruptcy advice, contact Fears | Nachawati. Email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

If you are considering filing bankruptcy, it is important that you are aware of both the advantages and disadvantages of taking this legal action. Bankruptcy, while it may be the right solution for your debt problems, is not without its downside.

First is the effect that bankruptcy will have on your credit. Bankruptcy remains on your credit report for as much as 10 years. During those 10 years it will be difficult for you to obtain credit and loans. If you are approved for a loan, it will likely be at a much higher interest rate. 

Even when bankruptcy is no longer on your credit report, you will always have to answer yes to having had a bankruptcy when asked on an application for a credit card or loan.

The second downside to filing for bankruptcy is the effect that it can have on your future employment prospects. Certain industries will not hire individuals who have filed for bankruptcy because they are considered to be high risk.

A third potential downside to bankruptcy is the effect that it can have on your ability to rent housing. Applications for rental housing often include credit checks, and having a bankruptcy on your credit report can result in a denial of your application.

Fourth, having a bankruptcy on your credit report can also adversely impact your ability to obtain car insurance. Some car insurance companies will deny your request for insurance, and others may charge you much higher premiums.

Last, you should also consider the cost of filing bankruptcy. Bankruptcy is not free. Once all is said and done, it will likely cost you around $2000 to file bankruptcy.

If you’re considering filing bankruptcy, you are well advised to first speak with a qualified bankruptcy attorney. The bankruptcy lawyers of Fears | Nachawati will provide you with a free initial legal consultation. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

American author Mark Twain was fond of saying, "There are three kinds of lies: lies, damned lies, and statistics." While it is important to scrutinize any statistic with a healthy dose of skepticism, bankruptcy statistics can help attorneys, courts, creditors, and even debtors understand who is filing bankruptcy and the reasons.

Today’s post will examine some bankruptcy statistics from a major study of bankruptcy debtors by Harvard Professor Elizabeth Warren entitled The Fragile Middle Class: Americans in Debt. This study found some surprising statistics:

● the average age of a bankruptcy filer is 38
● couples filing jointly make-up 44% of all bankruptcy filings. 30% of the filers are
women filing bankruptcy alone, and 26% of the bankruptcy filers are men filing alone
● most bankruptcy filers are slightly better educated than the general population
● two out of three bankruptcy filers have lost a job
● half of all bankruptcy filers have experienced a serious health problem
● 91% of bankruptcy filers have suffered a job loss, medical event or divorce
● 40% of bankruptcies result from medical crises, unemployment or divorces
● 90% of these filers have two car payments, a house payment, and an average of $2500
in credit card debt
● 10% of filers were delinquent only 5 to 29 days before bankruptcy

In 2008 there were 1,074,225 consumer bankruptcy filings. For the second straight year, Tennessee had the overall highest per capita rate of filings, with 7.65 filings per 1,000 residents. Put another way, that’s one-and-a-half people out of 200, per year.

While these bankruptcy statistics are enlightening and even useful, no two bankruptcy cases are the same. Unfortunately, some firms take a “one size fits all” approach to bankruptcy. If you are experiencing financial difficulty, seek out a qualified bankruptcy attorney to explain your rights and treat your case with the care and attention you need and deserve. Don’t be treated like just another statistic.
 

Contact Fears | Nachawati today for a free consultation regarding your bankruptcy needs.  Call us at toll free 1.866.705.7584 or reach us by e-mail at info@fnlawfirm.com. 

When we were children a preference was a good thing, such as: I prefer Johnny on my team for kickball; or my preference is chocolate ice cream. In the bankruptcy world a preference payment is a bad thing. A preference payment is a transfer of money by a debtor, on account of a pre-existing debt, that is made while the debtor is insolvent, and gives the creditor more than it would receive from the liquidation of the debtor's assets during a chapter 7.

The idea behind a preference payment is that the debtor chose to pay a certain creditor instead of other creditors – the debtor “preferred” this creditor. Preference payments are unfair to the debtor’s other creditors, and, if the transaction took place within 90 days, the bankruptcy trustee can compel the turnover of this preference payment to the bankruptcy estate for equal distribution to all creditors. And there is one other important caveat to preference payments: if the payment is made to an “insider,” then the avoidance period is one year. An “insider” is a generally a relative, business partner, etc. who has a special relationship with the debtor.

A common preference payment scenario is a payment by the debtor to a family member on account of a previous debt. For example: Mary borrows $3,000 from her mother to help pay bills. In March Mary receives her income tax refund and repays her mother the $3,000. Mary files bankruptcy in May, and doesn’t tell her bankruptcy attorney about the March payment. The trustee learns of the payment while examining the debtor’s bank statements and sues Mary’s mother to recover the $3,000 for the bankruptcy estate.

This awful situation for Mary and her mother can be easily avoided. First, do not withhold information from your attorney. Second, provide your attorney with any requested documents. Third, do not pay any creditor (or relative) without first consulting with your attorney. Cooperating with your attorney can ensure that your bankruptcy case is preference-free.

In many ways the new credit card law, the Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009* can help you with future credit card debt. It will help you against predatory lending practices and will help keep you in check by limiting your credit availability. But if you are looking for a fresh start right now, filing for Chapter 7 may be the best way to relieve the heavy burden of excess credit card debt.

When you file for a Chapter 7 bankruptcy in San Antonio, Texas, your credit card debt will be dismissed. You will get the fresh start you need as well as the opportunity to build credit in a more consumer friendly environment under the new Credit CARD Act of 2009.

If you are feeling the stress of too many credit card bills and not enough money to pay them, then a Chapter 7 bankruptcy may be the best option for you.  For a free bankruptcy consultation contact San Antonio Bankruptcy law firm, Fears | Nachawati, via toll free phone at 1-(866) 705-7584 or via e-mail at info@fnlawfirm.com. 

*Credit CARD Act of 2009 is a federal law passed by the United States Congress and signed by President Barack Obama on May 22, 2009. Briefly, it is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."