Call Today for a FREE Consultation
210-342-3400
Recent Blog Posts
When Are Chapter 7 Cases Subject to a Presumption of Abuse?
Not everyone qualifies for Chapter 7 bankruptcy. Only individuals and married couples who do not earn much income are eligible for this kind of debt relief. Meeting the income limits for Chapter 7 bankruptcy is also known as “passing the Chapter 7 means test.” If someone files for Chapter 7 bankruptcy but does not pass this means test, their case will likely be dismissed due to the court’s presumption of abuse. This is why it is important to have a Texas bankruptcy lawyer assist you with your case.
How Can a Filer Abuse the Chapter 7 Process?
Unlike Chapter 13 bankruptcy – which requires filers to stick to a repayment plan for three to five years – Chapter 7 bankruptcy filers do not have to repay their creditors before their qualifying unsecured debts can be discharged. Because creditors have rights too, the courts reserve the extreme benefits of Chapter 7 bankruptcy for low-wage earners who are unlikely to be able to repay their debts anytime soon.
How a Chapter 13 Bankruptcy Can Help Save Your Home
For homeowners facing the possibility of foreclosure, Chapter 13 bankruptcy is a potential lifeline. This debt reorganization plan offers a fresh chance to regain control of your financial situation and safeguard your home from repossession. If you are in danger of losing your home, exploring Chapter 13 bankruptcy could be the solution you have been seeking.
Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy presents a structured strategy for debt repayment. Spanning a period of three to five years, this plan enables you to create a practical repayment schedule, encompassing all your creditors, including your mortgage lender. As an advantage, your monthly payments are determined based on your income and expenses, making them more manageable.
After completing your Chapter 13 bankruptcy plan, outstanding balances for certain debts may be discharged as long as certain criteria have been met, including meeting all domestic support obligations and the completion of an approved financial management course. There are some debts that cannot be discharged, including home mortgages, child support and alimony debt, certain taxes, student loans, and more.
How Long Does a Bankruptcy Automatic Stay Remain in Effect?
One of the primary reasons that individuals choose to file for bankruptcy is that filing a case in bankruptcy court initiates an automatic stay. Once the automatic stay is in place, most collection activity – including wage garnishment, creditor lawsuits, repossessions, and foreclosure actions – must cease until a filer’s bankruptcy case is resolved or the court grants a creditor-specific allowance to bypass the restrictions of the automatic stay. As a result, while the benefits of the automatic stay are undeniable, filers cannot count on them to last forever.
Taking Advantage of the Stay: Chapter 7
Most successful Chapter 7 bankruptcy cases are resolved in a matter of months. As a result, the automatic stay only tends to function as a short “pause” button on creditor action for Chapter 7 filers. Meaning, once a filer’s eligible debt has been discharged at the conclusion of their case, the automatic stay will lift and any collection action that has not been resolved via discharge will resume.
Life After Bankruptcy: Learning from Detroit
When an individual files for bankruptcy, their focus naturally tends to remain on the urgent financial needs that prompted them to file for debt relief in the first place. They may have concerns about life after bankruptcy, yet, the very act of filing for Chapter 7 or Chapter 13 protection indicates that one’s financial situation is so dire that thinking ahead has become a luxury.
When the dust settles, a bankruptcy filer may start to focus more on both the temporary, negative consequences that their filing has inspired and on rebuilding their credit. It is at this phase of the bankruptcy process that learning from Detroit can come in handy.
Eating an Elephant
Ten years ago, Detroit, Michigan became the largest-ever city in the U.S. to file for bankruptcy. The city is now experiencing new growth and new opportunity but getting to this point was not an easy journey and that journey is not yet over. One building inspector described the experience of rebuilding and revitalizing the city as "We’re eating an elephant here," when interviewed by the New York Times.
Stay Off Social Media Until Your Bankruptcy Case Is Resolved
Filing for bankruptcy can be a stressful process, but it can also lead to a much-needed emotional and practical unburdening. You may ultimately feel so grateful that your interests are finally safeguarded by the automatic stay and that your case is moving forward that you feel inspired to post about your experience on social media. Yet, as difficult as it can be to refrain from connecting with others about this turning point in your financial journey, it is important to resist that urge until your case is fully resolved.
Your Social Media Activity Is Not Private
Social media platforms are public. Unlike email and text communications, which government investigators and actors can only generally access in the event that they have secured a warrant, anyone can search someone’s social media activity. If the trustee assigned to your bankruptcy case, a creditor, or a creditor’s legal representation chooses to review your social media activity, do not assume that strong privacy settings will safeguard your activity. You will want to assume that these interested parties both can and will get around your settings to view your activity.
Is Debt Settlement a Scam or a Good Option?
When an individual is struggling mightily with debt, they often need assistance with resolving one or more accounts immediately. Waiting even a week to find a solution can result, under some circumstances, in repossession of a vehicle, the initiation of a creditor lawsuit, or so much stress when creditors call again and again that an individual’s mental health begins to break down. Because debt resolution issues tend to be particularly urgent in nature, bankruptcy alternatives – including debt settlement services – that promise quick results can be very attractive. It is simply important to understand the true ins and outs of any debt management or resolution opportunity before committing to an approach.
The Benefits and Limitations of Debt Settlement
Some debt settlement opportunities are legitimate. For example, if the Internal Revenue Service will allow you to submit payment for an offer in compromise, you will be able to settle your overdue tax balance for a fraction of what you owe. This can be a beneficial approach to debt resolution for debt that is not dischargeable in bankruptcy. However, for-profit debt settlement services – which often focus on debt that is dischargeable in bankruptcy – are often either scams or scam-like.
Are There Any Drawbacks to Filing for Personal Bankruptcy?
The benefits of filing for personal bankruptcy are undeniable. The automatic stay can help you to avoid repossession, foreclosure, and other creditor action for as long as your bankruptcy case remains active. The time that the automatic stay affords you can allow you to renegotiate secured debt to make repayment more manageable. You can also fine-tune your finances over this period of time so that you are primed to meet new goals once your bankruptcy case is complete.
However, there are also some potential drawbacks to filing for personal bankruptcy. Although these challenges are temporary, they are worth considering if you are thinking about filing for bankruptcy but you still have some questions that are holding you back from moving forward just yet. Bankruptcy is an excellent debt relief and debt management opportunity, but you will want to make sure that it is the best option for your unique situation before committing to the process.
Tips for a Successful Chapter 13 Repayment Period
If you are thinking about filing for Chapter 13 bankruptcy, you are likely already aware that you will need to adhere to the terms of a repayment plan that you and an attorney will create and that your creditors will – hopefully – sign off on. Only after you have successfully completed your 3-to-5-year repayment plan, will the court discharge your remaining eligible debts and close your Chapter 13 bankruptcy case favorably.
Laying Groundwork for the Future
Although your single debt payment each month will be designed to be manageable, the terms of your repayment period will leave you with very little disposable income. Without some careful planning on your part, this repayment period could become stressful. Thankfully, thinking ahead and monitoring your situation carefully as it evolves can help to ensure that your repayment period is truly workable for you and your family.
To navigate your Chapter 13 repayment period successfully, you will want to think of your efforts as laying the groundwork for a solid financial future. Many of the habits that you will either cultivate for the first time or refine can help to ensure that you emerge from the bankruptcy process primed for financial success.
Why the Uptick in Corporate Bankruptcy Filings Matters for Families
According to S&P Global, more U.S. corporations filed for bankruptcy during the first four months of 2023 than any other year’s first quarter dating back to 2010. Evidence suggests that a combination of high interest rates, significant debt burdens, and consistently high inflation are all affecting corporate America’s ability to remain afloat without assistance. According to S&P, companies that specialize in consumer discretionary goods and services are being hit hardest. Although many businesses laid off workers within the last year to stave off financial challenges, their efforts did not make enough of a difference for those that have opted to file for bankruptcy.
Are Personal Bankruptcy Rates Going to Spike Next?
Generally speaking, when companies are laying workers off and filing for bankruptcy en masse, this indicates that many families across the country are also struggling financially. As a result, many individuals and married couples may discover that they too cannot regain their financial footing adequately without seeking the benefits that bankruptcy protection provides.
Why Do People File for Bankruptcy?
The 2008 financial crisis did result in a silver lining, as challenging as the situation was for corporations, families, individuals, governments, and communities alike. It allowed the public a greater understanding of the reality that even the most hard-working and financially-conscious individuals are often only a few rough-pay cycles away from the risk of financial devastation. It has been this widespread realization that people can fall on hard times through no fault of their own that has largely eliminated the stigma associated with taking advantage of the opportunity to file for bankruptcy.
Most Bankruptcy Filers Are Responsible
The most common reasons that individuals file for bankruptcy have nothing to do with financial irresponsibility. Instead, challenges such as medical emergencies or significant medical developments that require extensive treatment, unexpected job loss, economic conditions outside of an individual’s control, the death of a wage-earning loved one, and other challenging circumstances lead most filers to seek bankruptcy protection.
Call Today for a FREE Consultation
210-342-3400
