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Recent Blog Posts
Timing Bankruptcy to Cover New Debts
A bankruptcy covers the debts you owe as of the moment you file your case, not future debts. So how do you know when to file your case?
In last week’s blog post we introduced how to time your bankruptcy filing. We gave a list of 15 examples of timing considerations. Today we start with the first example: timing your bankruptcy filing so that it covers as many debts as possible.
Debts You Might Owe Very Soon
Here are two situations in which you expect to soon owe a debt that you don’t owe at the moment.
First, let’s say you have a medical condition for which you are about to see a doctor or other health professional. Or it’s an ongoing condition for which you get treatment regularly. Let’s assume that you know that you can’t afford to pay the upcoming medical bills for these upcoming services. You are already feeling overwhelmed by your present debts. You’re feeling pressure to file bankruptcy now to get relief from those debts. But you’re wondering if you should wait to file bankruptcy until after you’ve finished incurring the upcoming medical debts.
Timing Your Bankruptcy
The timing of your bankruptcy case is important, sometimes extremely important. It can determine if your case is as successful as it can be.
Five weeks ago we started a series on why you should get legal advice from a bankruptcy lawyer. We’ve also been making a point of showing why it’s smart to do so early, when you start considering bankruptcy.
It’s super important to get this legal advice so that you can learn:
- if bankruptcy is the best option for you, and how to pursue other alternatives
- how Chapter 7, 11, 12, and 13 work, and whether either are right for you
- what actions you should take to position yourself, whether you’re possibly or definitely filing bankruptcy
- what you should avoid doing
- the best timing for your bankruptcy filing
If you want to look back, we covered #1 and #2 five weeks ago. The next four blog posts got into different aspects of what you should and shouldn’t be doing before filing (#3 and #4). These included keeping assets (4 weeks ago), taking on debt (3 weeks ago), filing income tax returns and paying the taxes (2 weeks ago), and paying child/spousal support (1 week ago).
Paying Unpaid Child/Spousal Support before Bankruptcy
Before filing bankruptcy, should you pay child/spousal support debt in the meantime? This may depend on whether you file Chapter 7 or 13.
Our last three blog posts have been about what you should and should not do before filing bankruptcy. Three weeks ago we focused on keeping your assets, especially any retirement funds, and collateral, such as home or vehicle. Two weeks we discussed whether to take on more debt, maybe to buy time and not need to file bankruptcy. And last week we looked at whether you should file any unfiled income tax returns, and pay income taxes.
Today the question is whether to pay unpaid child/spousal support before filing bankruptcy. As with all of these issues, there are some general principles worth getting to understand. But everybody’s situation is truly unique. So you really do need the help of an experience bankruptcy lawyer to apply these principles to your personal situation. This blog post can be the first step towards becoming well-informed about your options. It’ll help you ask the right questions so that you can make the best decisions.
How Do I Know if I Should File for Bankruptcy?
For many people, the thought of filing for bankruptcy is a scary one. However, for many people, filing for bankruptcy is the best thing they could do for their finances. Filing for bankruptcy allows you to wipe your slate clean and discharge most of your unsecured debts, but it does come with some consequences. Filing for bankruptcy might make your life more difficult in the future, by making it harder to borrow money, lowering your credit score or even affecting your insurance rates. It can be difficult for some people to gauge whether or not bankruptcy is in their best interests, which is where a skilled Texas bankruptcy lawyer can help.
Your Debts Far Exceed Your Income
Think about all of your different types of debt: your mortgage or rent, car payment, all of your different credit cards, and personal loans. How much total debt do you have? Now, think of your income. How much money do you bring in each month? If your monthly debt obligations are much higher than the amount of money you bring in, you may want to consider filing for bankruptcy.
Unfiled Tax Returns and Bankruptcy
If you’re considering filing bankruptcy, should you first prepare and submit any unfiled income tax returns? Should you prioritize paying them?
Our last two blog posts have been about what you should and should not do before filing bankruptcy. These are important to consider even if you hope to avoid bankruptcy but are sensibly admitting it’s possible.
So two weeks ago we focused on keeping, and not selling or giving up your:
- assets
- especially any retirement funds
- collateral on debts, such as your home, vehicles, or furniture
Last week we discussed whether to take on more debt to buy time and maybe avoid needing to file bankruptcy.
Today we look at whether you should file any unfiled income tax returns, and possibly prioritize paying unpaid income taxes.
The Quick Answer
In general you should:
More Actions to Take When Considering Bankruptcy
If you’re considering filing bankruptcy, what debts can you incur and which should you avoid? What are the possible consequences?
Two weeks ago we listed 5 crucial things you’d benefit from learning about if you’re thinking about bankruptcy:
- if bankruptcy is indeed the best option for you
- how Chapter 7, 11, 12, and 13 work, and whether one is right for you
- what actions you should take to position yourself for either a possible or definite filing
- what you should avoid doing
- the best timing for your bankruptcy filing
We covered the first 2 of these back then. Then last week we got into # 3 and #4, actions you should take and those to avoid before bankruptcy. We focused on keeping, and not selling or giving up your:
- assets
- especially any retirement funds
- collateral on debts, such as your home, vehicles, or furniture
Is Student Loan Debt Dischargeable in a Texas Bankruptcy?
Student loan debt is something that is becoming an issue in the United States. According to the latest statistics from Forbes, there are currently an estimated 45 million borrows who collectively owe about $1.56 trillion in debt for student loans. Of those, around 11 percent are delinquent on their loans, which means they are 90 days or more late on a payment. For many borrowers, student loan payments are expensive and they are struggling to make ends meet. Many have inquired as to whether or not student loan debt is dischargeable in bankruptcy, but the answer is not quite as simple as a "yes" or "no."
Is it Even Possible?
Many people believe that student loans are ineligible to be included in a bankruptcy and they would be correct -- but only in most situations. It is not impossible to discharge your student loan debt in a bankruptcy case, but it will make your bankruptcy more difficult because you will have to file an adversary proceeding to determine whether or not you are eligible to have your student loans discharged.
Paying Missed Mortgage Forbearance Payments
If you receive forbearance on your mortgage payments under the CARES Act, when do you have to catch up on those missed payments?
Last week we presented the new law allowing forbearance—skipping payments—on federally backed mortgages during the pandemic. Basically, if you’ve been financially affected by the pandemic you can request and receive a 6-month forbearance on payments. This can be extended another 6 months if the declared emergency continues at that point.
The obvious question this raises is when do these missed payments need to be paid. This is the topic of today’s blog post.
Major Confusion about Timing of Repayment
The CARES Act provided what is essentially a right to forbearance on federally backed mortgages. But CARES doesn’t say a word about the terms for payment of those payments missed during the period of forbearance.
How Are Monthly Payments Calculated in a Chapter 13 Repayment Plan?
Being unable to meet your monthly debt obligations can be a serious source of stress. Many people in this situation turn to bankruptcy as a possible solution. For some people who have a steady income, a Chapter 13 repayment plan may be the best option. Often referred to as the “wage earner’s plan,” this type of bankruptcy allows individuals to repay all or a portion of their debts over a period of three or five years. Each month, a single payment is made to the bankruptcy trustee, who then distributes the appropriate amount to each creditor.
Chapter 13 bankruptcies are popular with individuals who have secured debt attached to certain items that they want to keep, like a house or a car. This is because a Chapter 13 bankruptcy allows individuals to distribute any past due payments into the repayment plan so they can get caught up. While the draw of a Chapter 13 bankruptcy is present, most peoples’ first question is, “How much will my payments be?”
Pandemic Mortgage Forbearance
Mortgage delinquencies skyrocketed in April. One big reason: the pandemic CARES Act provided for extraordinary mortgage payment forbearance.
Epic Increase in Mortgage Delinquencies
The number of home mortgages that became delinquent in April was largest one-month increase in U.S. history. 1.6 million mortgages current in March were not paid in April, according to Black Knight, a mortgage data provider.
For some perspective, the percentage of all mortgages that became delinquent nearly doubled in that one month—from 3.39% to 6.45%. This percentage increase was also the largest in history. It broke the last record monthly percentage increase set in 2008, during the Great Recession. The April increase was nearly 3 times the monthly increase back then. This is in spite of the reality that the Great Recession was an epic mortgage crisis.
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