The short answer is no.  This is because while you are in bankruptcy you should not be incurring new debt without court permission.  Most of the time a credit card will not issue a card to someone who is in an active bankruptcy case, because they do not want to violate the bankruptcy code and face sanctions from the bankruptcy court.  Furthermore any cards that a debtor has prior to filing the case will be discharged in the bankruptcy case, except under rare exceptions.  Therefore the debtor will not be able to continue to use their cards.

The entire point of a bankruptcy case is to get a fresh start and to get rid of the debt and allowing a debtor to continue to incur debt while in the bankruptcy case complicates and frustrates this goal.  When preparing to file a bankruptcy case a debtor must take a look at their finances and make sure that they are living within their means and question why they would have a need to continue to spend on credit.

If you have any questions about bankruptcy, contact the attorneys at Fears Nachawati today. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com for a free consultation.
For those involved in a Bankruptcy, rest assured that your Bankruptcy case will not prevent you from getting married.  For those involved in a Chapter 13 Bankruptcy however, your upcoming marriage may have an effect on your case.
 
In a Chapter 13 Bankruptcy, you are required to pay your disposable income into your bankruptcy plan in order to pay back your creditors.  The calculation to determine your disposable income includes all household income.  Even if you file an individual case, as opposed to a joint case with your spouse, your spouse’s income is still included as the household income.  For those who get married after their case is filed, their household income may increase if their new spouse is employed.  The Bankruptcy Trustee will want to review their income to see if you can afford a higher return to your creditors.  While your new spouse’s credit will not be affected by your bankruptcy, their income may still come into play.   However, your spouse will have their separate expenses which they were responsible for before the marriage.  
 
If you decide to get married during your bankruptcy, congratulations!  Also, discuss your situation with your bankruptcy attorney who can assist you making any necessary changes to your bankruptcy plan and make sure any changes fit inside your budget. If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.
 

Just as debts incurred after a case is filed are not subject to the bankruptcy discharge, so is property acquired after bankruptcy not at risk of turnover in a Chapter 7 case. Essentially, whatever you own is used to pay whatever you owe, and the rest is discharged at the end of the Chapter 7 case.

One exception to this general rule is an inheritance. Since bankruptcy attempts to balance the rights of the debtor with the rights of creditors, it would not be fair to allow a debtor who is expecting an inheritance to file bankruptcy, discharge all of his debts, and then collect a fat inheritance. Consequently, Congress enacted section 541(A)(5)(a) of the Bankruptcy Code which states that an inheritance can be used to pay creditors (i.e. included in “property of the debtor’s estate”) if the debtor acquires or becomes entitled to acquire the inheritance within 180 days after filing bankruptcy. In other words, if your aunt Bessie dies within 6 months of your bankruptcy filing, the trustee could take the inheritance to pay your creditors, even after your case is closed.

While the above is the rule for Chapter 7 cases, it is different for Chapter 13 debtors. In a Chapter 13 case, the debtor is expected to contribute whatever he reasonably can to pay his creditors. In the case of an unexpected inheritance during a Chapter 13 case, the debtor must pay the inheritance into the plan, minus any exemptions. Yes, even if the right to the inheritance arises more than 180 days after the bankruptcy filing date.

The Fourth Circuit Court of Appeals recently made this issue clear when it decided the case of Carroll v Logan. In Carroll, the debtors filed bankruptcy; then received an inheritance of $100,000 three years later during the repayment period of their Chapter 13 case. The bankruptcy Trustee moved to modify their plan and pay the $100,000.00 to creditors. The debtors objected, arguing that section 541 states that inheritance property is “property of the estate” only when the right to acquire it occurs within 180 days of the bankruptcy filing date. In this case the right to the inheritance was well outside that 180 day limit.

The trustee countered that section 1306 of the Bankruptcy Code expands section 541 to include property acquires after commencement of the case but before the case is closed, dismissed, or converted to a case under a different chapter. The bankruptcy court and the appellate courts agreed with the trustee, and approved the order to pay the $100,000.00 inheritance into the plan.

Interpreting the Bankruptcy Code is challenging work, even for skilled professionals. That is why it is critical to hire counsel for your bankruptcy case who is committed to staying informed of trends and changes in the bankruptcy world. If you are considering bankruptcy, contact the experienced bankruptcy attorneys at the Fears | Nachawati Law Firm for a free consultation by calling our office at 1.866.705.7584.

 

If you are struggling with overwhelming debts that you cannot pay, bankruptcy can shield you from creditors and legally restructure your personal finances. The federal law contains many consumer protections that can give you “breathing room” to account for and reorganize your financial affairs. These protections are available to a debtor before, during, and after bankruptcy.

 

Before Bankruptcy

There are several powerful consumer protections available to all consumer debtors, including:

• The Telephone Consumer Protection Act, which limits when and how a debt collection call can be placed.
• The Fair Credit Reporting Act, which regulates how consumer credit information is collected and reported.

Perhaps the most useful federal protection for a pre-bankruptcy debtor is the Fair Debt Collections Practices Act, or FDCPA. This law states that a third party debt collector (collection agency or attorney) must stop all communications with the consumer after an attorney is hired. Consequently, after hiring a bankruptcy attorney to prepare a bankruptcy case the debtor gains the added benefit of obtaining relief from collection harassment under the FDCPA.

 

During Bankruptcy

Once the bankruptcy case is filed, the debtor receives the protection of a court injunction, commonly called the “automatic stay.” The automatic stay is a temporary injunction that prohibits all collection activity during the bankruptcy case. All telephone calls, mail harassment, lawsuits, garnishments, repossessions, and foreclosure activities must stop immediately once the bankruptcy case is filed. The automatic stay continues throughout the bankruptcy case, until either the court orders the stay lifted, the debtor receives a discharge, or the case is dismissed. Co-debtors are also protected by the automatic stay if the debtor files a Chapter 13 case, but not if the case is a Chapter 7 bankruptcy.

 

After Bankruptcy

After the debtor receives a discharge, the automatic stay temporary injunction is replaced by a permanent injunction contained in the discharge order. A creditor or subsequent collector is forever barred from collecting on a debt that is discharged in bankruptcy. Specifically, the creditor may not contact or collect from the debtor personally. However, the creditor may have other collection rights available, including collecting from a co-debtor who did not file bankruptcy.

If you are struggling with debts you cannot afford to pay, speak with an experienced bankruptcy attorney and discuss your options. Bankruptcy is powerful and lasting relief that can permanently discharge your debts and help you start on a new and better financial path. For a free consultation with an experienced bankruptcy attorney at the Fears | Nachawati Law firm, contact us by calling our office at 1.866.705.7584.

The amount of an auto insurance premium is determined by statistical data that predict the individual’s risk for a loss. Common factors that impact an insurance premium include year, make and model of the vehicle (e.g. more expensive cars are more expensive to repair and insure), the age and gender of the driver (e.g. a young male is statistically more likely to have an accident than a middle aged woman), and how the vehicle is used (e.g. driving a short daily commute is less likely to be in an accident than a traveling salesman).

Another predictor of risk used by 92% of all insurance companies is the individual’s credit score. Filing bankruptcy will drive down an individual’s credit score and will ordinarily increase insurance premiums. This begs the question, what can an individual do to keep his or her insurance rates low when filing bankruptcy?

The first and most obvious answer is, lock in your insurance rate before filing bankruptcy. Instead of a six month auto insurance policy, consider one with a term of twelve months. Paying the policy in full prior to bankruptcy also reduces the chances of being canceled for a poor credit score. Credit scores are generally lowest immediately after a bankruptcy filing and will increase during the subsequent twelve months.

Another option is to do some rate shopping. Not every insurance company discriminates on the basis of credit, and some are more forgiving when it comes to personal bankruptcy. An independent insurance agent with connections to several different companies should be able to find a reasonable rate, especially if there is a good history of paying insurance premiums, no insurance claims, and no moving violations in the past three years.

Bankruptcy is often trading a short-term pain for a long-term gain. An experienced bankruptcy attorney can prepare you for some of the issues surrounding your bankruptcy filing and lessen the temporary sting. If you are considering filing for bankruptcy, the experienced bankruptcy attorneys at the Fears | Nachawati Law Firm can offer you the legal guidance and assistance needed to get back on your feet financially. For a free consultation, contact our office at 1.866.705.7584.


 

One common question during the initial bankruptcy interview is, “Can I keep my cell phone?” This question is actually three questions with three different answers.

First, can you keep your personal cell phone? All property that you own, including your cell phone, must be listed in your bankruptcy schedules. Legal exemptions are then applied to protect unsecured equity. Any property not encumbered by a lien or protected by an exemption is fair game for the Chapter 7 bankruptcy trustee. The debtor does not lose property in a Chapter 13 bankruptcy. Even if you lack an exemption to protect your cell phone, the Trustee will likely not bother with it because its value to creditors is too little.

Second, can you continue your current cell phone service? Unexpired contracts; such as a cell phone contract, are listed in your bankruptcy schedules. The debtor is then able to accept or reject the contract. As a practical matter, filing for bankruptcy will not terminate your cell phone contract or disrupt your service.

Third, can you force your cell phone carrier to continue service if you owe it money? This is a tougher question. The bankruptcy code protects debtors from the disconnection of necessary utilities like water, electricity or gas services in Section 366. 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.

The interesting question is whether utility protection for the debtor applies to cell phones. When implementing section 366, Congress stated that:

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.

It is common knowledge that individuals are dropping home land lines in favor of cell phones. According to trade group US Telecom, over 100 million land lines have been disconnected since 2000. It is expected that only 1 in 4 U.S. households will have an active copper phone line at the end of this year, and telephone giant AT&T has announced its intent to turn off its network of copper land lines by the end of this decade.

So, does Section 366 apply to an individual’s cell phone service? Most likely not.

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. The court reasoned that the debtor could “easily obtain comparable service from another utility.” The debtor will typically have choices when it comes to cable television, cell phone, and internet; so a bankruptcy court will likely find that Section 366 does not apply to these services.

Most debtors are able to keep their cell phone and continue service without interruption. However, every bankruptcy situation is different, so discuss your circumstances with your bankruptcy attorney. If you are considering filing for bankruptcy, the experienced attorneys at the Fears | Nachawati Law Firm can provide you with the education and exceptional legal advice needed to get out of debt and make a fresh start. To set up a free consultation, click here, or call our office at 1.866.7105.7584.

When an individual files a bankruptcy case, a bankruptcy estate is created. This bankruptcy estate is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.” Consequently the debtor must identify all legal and equitable property rights when completing the bankruptcy schedules. But what exactly is a legal interest and what is an equitable interest in property?

Without getting too technical, a legal interest is simply ownership that is readily recognized by law. Say, for instance, that you go to the auto dealer, buy a car, and title it in your name. This is a legal interest in a vehicle that is disclosed when completing your bankruptcy schedules.

On the other hand, an equitable interest may exist when there is no legal interest, but in fairness there should be an interest in the property. The most common type of equitable interest is an express trust. In a trust a trustee holds the legal right to the property for the benefit of another person (the beneficiary). If you are the beneficiary of a trust, this is an equitable interest that must be disclosed on your bankruptcy schedules.

Another common situation that may result in an equitable interest is a child’s vehicle. Suppose that your son purchased a car with his own money, but it is titled in your name to save on insurance. You have legal title, but your son has an equitable interest. You must list your legal interest on your bankruptcy schedules. That begs the question: can the bankruptcy trustee take the car?

Probably not. This situation is called a “resulting trust.” Your son paid for the car and drives the car. . . it’s his car. Just like in the express trust situation discussed above, the law will recognize that you are the trustee with legal title of the car and your son is the beneficiary. The bankruptcy trustee will want evidence of the “real owner,” including evidence that shows you did not pay for the car.

Equitable and legal interests are sometimes difficult to distinguish during bankruptcy. If you have co-signed for a secured loan, recently purchased property for a family member, or are named in a trust, there is likely a property interest that must be disclosed. It is vital to discuss all of your financial issues with your attorney prior to your bankruptcy filing. Your attorney can propose options for dealing with the situation and for protecting your property rights.
 

Texas BankruptcyDallas Bankruptcy | Austin Bankruptcy | Fort Worth Bankruptcy | San Antonio Bankruptcy | SEO Company

For most people having reliable transportation is a necessity. A vehicle is required to get to work, school, or to an appointment at the doctor. Most of us can’t imagine doing without a personal vehicle. Filing bankruptcy doesn’t mean you have to give up having a car, truck, or motorcycle.

The first question is whether you have equity in the vehicle you own. Equity is simply the difference between the amount you owe and what your vehicle is worth. If you owe more than your vehicle is worth, you have "negative equity," which is really no equity at all. The bankruptcy laws allow you to keep a reasonable amount of vehicle equity. If this amount is not enough to fully protect the vehicle, you may use other legal exemptions to protect your vehicle equity. Finally, if you have more vehicle equity than you can legally protect, you can purchase the equity from the Chapter 7 trustee.

The second consideration is your lender. There are three options for dealing with vehicle loans in Chapter 7 bankruptcy: reaffirmation, redemption, and surrender (a controversial "fourth option" is available in some states and circumstances. Speak with your attorney to see if your situation qualifies).

If you wish to continue the monthly payment, you can execute a reaffirmation agreement. This is a contract that states that the debt you owe the lender will survive the bankruptcy and the lender agrees to not repossess the vehicle. In some cases you can use a reaffirmation agreement to rewrite the original agreement. This can be useful if you have missed a few payments or need to reduce your interest rate.

If your vehicle is substantially "upside down," you may want to consider a redemption. In a redemption, the debtor pays the lender the fair market value of the vehicle. The payment is made in a lump sum which usually requires another loan at a high interest rate. However, for a car that is worth thousands less than what is owed, the new monthly payment could be hundreds less – even with the high interest rate.

The final option is surrender. Sometimes just walking away from a lemon or a bad deal is the best choice. In a Chapter 7 bankruptcy, you simply turn over the car to the lender and owe nothing. There is no prohibition against buying a different vehicle during or after your bankruptcy case. If you need to purchase a different vehicle, speak with your bankruptcy attorney.

The United States bankruptcy laws contain powerful provisions for protecting property and reducing debt. There are many options available in Chapter 7 or Chapter 13 cases. Consult with an experienced bankruptcy attorney and explore your options under the federal law.
 

Texas BankruptcyDallas Bankruptcy | Austin Bankruptcy | Fort Worth Bankruptcy | San Antonio Bankruptcy | SEO Company