fbpx

Bankruptcy

Benefits of Filing for Bankruptcy

Many people believe that filing for bankruptcy worsens their financial position. However, this is not entirely true. While it is true that bankruptcy affects a person’s finances for some future years, in many cases, filing is the next best option. Here’s why:

Suspension of Debt Collection

Once you file for bankruptcy, the court automatically issues a stay against all creditors and debt collection proceedings. While this does not mean that your debt is canceled, it gives you some time to sort out all your debt before the bankruptcy case is deemed complete or till the stay is lifted.

In cases where debt collection is suspended, your debt collectors cannot call you or send you letters. There can be no lawsuits on the debts that you owe. You do not have to face any more wage garnishments, home mortgage foreclosures, and property repossession.

During the time that the court suspends your debt, if any creditor contacts you, your attorney has the right to bring a contempt of court action against them. This means that the court can penalize them for approaching you, stop them from their debt collection attempts, or make them pay for any inconvenience caused.

However, keep in mind that an automatic stay order does not mean you can stop criminal proceedings, government tax audits, modifying, collecting, or establishment of child support or alimony, the establishment of paternity, or co-debtors and co-signers. Moreover, if you have filed for bankruptcy only once in the past year, you can be eligible for an automatic stay. This does not apply if you have filed for bankruptcy twice or more in the past year.

Dischargeable Debt

Dischargeable debts are those that can be entirely eliminated by bankruptcy. When you file for bankruptcy, you can discharge, cancel, or overturn your responsibility to repay some debts based on your circumstances. These include credit card debt, medical and utility bills, and some personal loans.

Exceptions

Exempting an asset means that it will not get seized during bankruptcy. This applies to both Chapter 7 and Chapter 13 bankruptcy. While some exceptions protect a certain dollar amount of an asset, others cover the entire asset. Some exceptions may only apply to a set group of assets, such as a motor vehicle or wedding ring, while others can apply to other properties you own and do not wish to give up.

Credit Score

Most people do not file for bankruptcy because they worry about a tanked credit ranking. There is no denying that a bankruptcy filing leaves proof. It remains on your record for anywhere between 7 to 10 years. However, many debtors have claimed that their credit scores actually improve after they file for bankruptcy.

This is because when your dischargeable debts are canceled, you can move forward in life with a clean slate. With some patience and hard work, you can slowly rebuild your credit and gain the confidence of the people around you.

Depending on your personal financial circumstances, bankruptcy may or may not be for you. To know more about your unique case, get in touch with the bankruptcy attorneys at our firm today (insert link of the website).

Debunking Bankruptcy Myths

Filing for bankruptcy is scary. There is no denying that it can feel overwhelming and incredibly stressful, especially if you are not aware of the insolvency procedure and think that you are at risk of losing your entire life’s savings and belongings.

Over the years, a lot of bankruptcy myths have been heard, and instead of being disregarded, are being believed by a wide section of the population. However, it is important to realize that sometimes, bankruptcy might be the only option for your financial resolution.

Here are some bankruptcy myths that are absolutely untrue.

You Are Likely to Lose Everything

Most people shy away from filing for bankruptcy because they believe that they will lose all their belongings. However, the chances that you can keep all of your possessions are high. After a bankruptcy order is made, all your property becomes the “bankrupt’s estate.” In the same way, the property obtained during personal insolvency is also eventually amalgamated with the estate.

Even though a bankruptcy estate will take control of your assets and freeze your accounts, that does not mean that you will be left without any assets or belongings. Tools of trade, such as equipment, cars, and anything important to run your business or employment, will be in your possession. After all, how can you earn a living and make money to repay your creditors if you do not have the resources to do so? Moreover, household items, such as bedding, clothing, furniture, utensils, and basic equipment, will not be taken as they are essential for you and your family’s survival.

Hiding Assets is an Option

Honestly is of utmost importance with your bankruptcy trustee. This means you cannot lie about your assets. In fact, any non-disclosed or hidden assets can cause severe problems. Your bankruptcy trustee might even suspend your bankruptcy order for an indefinite period of time. Basically, you will face a bunch of consequences that could be avoided if only you had stayed honest.

A bankruptcy trustee is responsible for taking care of your finances and coming up with a realistic debt management plan. This can only be done if you reveal all the relevant information. If you do not, there are chances of an arrest warrant. Yikes!

You Will No Longer Be Allowed to Work

Another common bankruptcy myth is that you will not be allowed to work. This is not true. In fact, your trustee and creditors have no control over your work. This is because despite declaring bankruptcy, you still require an income so that you can make repayments and complete the debt management plan. Hence, work is necessary!

However, there are some exceptions, especially if you are working as a director. You will have to ask the court for a special exemption to continue working at such posts. Moreover, bankruptcy might have an effect on your position within the finance sector, and you may not be free to obtain credit.

If you have more questions about how bankruptcy impacts your career and future credit, make sure to consult a professional as soon as you can. Better to get all your questions answered beforehand than deal with any last-minute surprises!

Bankruptcy Warning Signs: Am I in Trouble?

Most people do not realize that they are under threat until they hit bankruptcy. Suddenly, they have no money, piling debts, and threatening calls to tend to.

Here are bankruptcy warning signs to look out for:

Missing Payments

This is the number one sign that you should look out for. If you are unable to meet the deadline for your bills and they are overdue, this means that your debt has started to become excessive. What’s even more stressful is when you cannot meet obligations, including mortgage, auto-loan payments, or electricity bills.

Credit card bills also tend to pile up. If you find yourself struggling to may even the most basic monthly payments, it’s time to take a step back to assess your expenses and income.

Debt Management is Not an Option

Some companies or non-profit workgroups help you manage your bills by prioritizing necessary payments, putting them in order, and contacting creditors to ask for some relief. Some people who struggle with meeting their monthly budget opt for credit counseling.

However, to qualify for these programs, you must have your own assets or steady income. Without these, enrolling is not an option.

No More Home-Equity Option

Home-equity loans are taken to pay off debts, such as credit-card bills that come with high-interest rates. If you want to learn to manage your expenses, the trick is to pay off your credit card debt and not exceed your limit again.

If you do not manage to clear your debts even after using the home-equity option, you may be in more trouble than you can imagine.

Debt Collectors Keep Calling

If you are constantly getting threatening calls or demanding letters from debt collectors, consider this a red flag. You will usually get to this point if you haven’t paid off your debt for 30 to 90 days.

You might also start to get notices that an over-due account is being reported on your credit report or is being charged off as uncollectable.

Your Credit Cards Are Maxed Out

Oops! Another red flag! This is one of the key bankruptcy tipping points. If you have run up the maximum limit of your credit card, you have hit a wall. You can no longer spend any more from your card; neither will you be able to gain approval for other kinds of loans.

Moreover, if you rely on your credit cards to cover basic expenses, such as home groceries or petrol, you’re in trouble as your income should cover these costs.

Major Financial Setback

According to a study by the Financial Industry Regulatory Authority (FINRA), most people do not have an emergency cash reserve kept aside for special situations. In fact, the study showed that approximately two out of five Americans could not even gather $2000 within a month’s time.

Hence, big expenses, such as a hefty medical bill, divorce, job loss, or other significant expenses, can push people to the brink of bankruptcy. That is why it is always better to plan beforehand and be prepared for any calamity to strike.

If any of these signs seem familiar to you, it is safe to assume that you are in trouble. Ease up on your expenses and contact a professional team to guide you through the relevant process.

Bankruptcy Misunderstandings

Bankruptcy Doesn’t Mean Losing Any of Your Property

When most people imagine bankruptcy, they think of one having to part ways with some or all of their assets to pay back creditors. It is because of this misunderstanding that many shy from taking advantage of bankruptcy when they are finding it difficult to manage their debts.

It is important to know that for individuals’ debtors, two main types of bankruptcies exist to provide them with financial relief – Chapter 7 and Chapter 13. Only in Chapter 7 are your assets liquidated to pay back creditors, while in Chapter 13, your payments schedules are rearranged to one that you can manage better. So, if it is merely a lowering of the monthly debt repayments that you are seeking, filing under Chapter 13 is the way to go.

However, even in Chapter 7 bankruptcy, legal protections exist both on a Federal and State level that prevent properties essential to your survival from being sold off during the process. In Texas, for instance, this can include but isn’t limited to personal properties up to $100,000 in value ($50,000 if single), one motor vehicle, and your main residence.

Have any questions relating to bankruptcy? Don’t hesitate to schedule your free consultation with the Law Offices of the Sean T. Flynn

Phone: 512-640 3340

Email: sean@seanflynnlaw.com

#Bankruptcy #Chapter7 #Chapter13 #USLaws #LegalHelp #TX #Attorney #BankruptcyRelief

Credit Counseling and Debtor Education Requirements

It is required for anyone wanting to file for bankruptcy that they take prebankruptcy credit counseling and predischarge debtor courses. Both courses are taken at different times in the process. Credit counseling, the first course, must be taken before filing for bankruptcy, whereas the debtor education course after filing. Sometimes, an additional class on managing personal finance must be taken before a discharge is issued at the end of the applicant’s case. Very few people qualify for certification and must later bring in an attorney.

We will briefly go over the Prebankruptcy Credit Counseling Course and the Predischarge Debtor Course in this short read.

Prebankruptcy Credit Counseling

This course will provide you with an idea of whether you really need to file or an informal payment process would be best for your economic revival.

Guiding is required regardless of there being a seemingly practical payment. Or you are confronting obligations that you find unjustifiable and don’t have any desire to pay.

The guiding office generally readies a spending plan dependent on your pay and costs and afterward audits your repayment choices. Mostly, the organization informs you that you don’t have any feasible alternatives for repayment; you must, hence, file.

Bankruptcy law requires just that you take an interest in the counseling—not that you oblige whatever the office proposes. Regardless of whether a repayment plan is attainable, you’re not needed to consent to it. Be that as it may, if the organization concocts an arrangement, you should record it alongside your other bankruptcy documents.

Browse through these results to find the prebankruptcy course that suits you.

Predischarge Debtor Education

This course is to be taken after filing for bankruptcy.

The second class, an individual budgetary administration course, is known by a few names — including the Predischarge Debtor Course, the “second” course, and the post-documenting course.

You must enroll in a course offered by an organization affirmed by the Office of the U.S. Chapter 11 Trustee. If you can’t manage the cost of the course, you will be permitted to pay what you can bear on a sliding scale. Course costs differ; however, the Executive Office for U.S. Trustees (EOUST) says that courses costing under $50 are manageable. Any bankruptcy instruction supplier that needs to charge more than that needs endorsement from EOUST.

You can take the course face-to-face, over the telephone, or on the web, and the teacher will give every single required material. On-the-web and telephone courses require agreeable consummation of a test.

You can take the pre-release course together or independently on the off chance that you are hitched, and both you and your mate are experiencing liquidation together. Chapter 11 courts require fruitful fulfillment of the two courses before your obligations can be released.

For detailed information on these courses and other processes involved, visit the official United States Courts website.

Bankruptcy May Actually Help Your Credit Score

Meta Title: Bankruptcy May Actually Help Your Credit Score

Meta Description: Wondering how filing for bankruptcy could help your credit score? You’d be surprised!

Keywords: Filing for bankruptcy, credit score

Bankruptcy May Actually Help Your Credit Score

Bankruptcy laws were formed to help relieve you from creditors by giving you a fresh start to your finances. While there is no denying that this fresh start comes at the cost of a significant hit to your credit, bankruptcy does have some good long- and short-term effects on your credit.

Depending on your credit score, assets, and current financial situation, you can benefit from bankruptcy.

What is a Credit Score?

To put it simply, a credit score is a number that portrays your credit history and decides whether or not you will falter on a debt. Lenders view this score whenever you ask for debt so that they can decide whether or not they want to give you a loan and what interest rate they want to charge.

The most common type of credit score is FICO scores. These can fall anywhere between 300 to 850. A FICO score depends on the information present in your credit report. This includes:

  • Your history of debt repayment
  • The debt you currently have lined up, including your debt-to-credit ratio
  • Different types of credit that you might have obtained
  • The amount of time you have had credit for
  • Whether or not you have new credit that needs to be paid.

A high FICO score is an indication that you are good at managing your finances. However, a subpar FICO score shows that you are negligent with your credit payments, have a number of unpaid debts in line, have recently gone through a foreclosure, have filed for bankruptcy, or experienced other issues in the process of repaying debt.

How Filing for Bankruptcy May Help Your Credit Score

Getting Rid of Delinquent Accounts

There’s nothing worse than making late payments, as these will wreck your credit score. However, filing for bankruptcy will help remove a large percentage of the delinquent accounts that you may have on your credit report.

This means that once you discharge these debts, they do not read as delinquent on your credit report. Instead, they appear as “discharged.”

Changing the Debt-to-Credit Ratio

An individual’s debt-to-income ratio is regularly considered by credit bureaus. This is why if you have more debt as compared to the amount you earn, your credit score will most likely be low.

However, if you manage to remove some of your debt by filing for bankruptcy, your income will stay the same, and your creditworthiness has good chances of improving.

Allow Yourself to Start Fresh

Debt can be crippling. It can make people feel trapped and suffocated, especially if your debt has reached an unmanageable amount, and your income does not match anywhere close to it. During these times, instead of letting yourself drown in hopelessness, it is essential to realize that filing for bankruptcy may actually give you a fresh start.

Once you get a fresh start, you can start regulating your spending and pay close attention to finding ways to improve your credit score.

By taking advantage of bankruptcy protection in your city, you may start to notice an improvement in your credit score. To find out more about Chapter 7 and Chapter 11 bankruptcy, click here (insert link of the website).

Costly Mistakes to Avoid When Filing for Bankruptcy.

Bankruptcy can be a dreary experience. Should you want to rise from the ashes on top, we advise you to do a once over of what is not supposed to be done when filing for bankruptcy. Everybody wants to sneak in unscathed giving false records or hiding assets that would otherwise not aid them in the process if discovered.

No court allows you to go free if you are caught, and will definitely penalize you.

Following chapters 7 and 13 Bankruptcy, these are some prioritized, costly mistakes to avoid when filing for bankruptcy.

Lying About Your Assets and Not Consulting an Attorney

Chapter 7 bankruptcy contains a “means test,” which is essentially a requirement that you provide utmost financial transparency to determine your ability to pay creditors off. You must pass this test; otherwise, in some cases, you could be banned from filing on hidden debts ever again. One way or the other, someone will discover discrepancies or hidden assets. So, here’re three words: tell the truth.

Also, it is essential that you consult an attorney before filing for bankruptcy. No matter how well-educated, civilians cannot and should not file on their own.

Giving Assets to Family Members and Amassing Up Credit Card Debt

A big no-no, never lend cash or property, cars, jewelry, even electronics to blood relatives or friends, assuming that they will return it in the future. Also, if you give your car away to a sibling and you go file for bankruptcy is a one-way ticket to losing your car for good. List all your assets and liabilities.

If you see yourself heading down the “B” road, quit using your credit card when you know you will eventually have to file. Otherwise, all the bad credit will come back to haunt you at the time of filing.

New Debt and Not Doing Research

It is not advised to take on new debt when you have to tap into your equity to manage finances. Wise choices include letting go of any debt financing if you see yourself headed towards bankruptcy.

Knowing the rules before entering the game is pretty much the unsaid rule we all abide by. You cannot file bankruptcy for every debt. Payments like student loans, child support, tax debt, and alimony are not covered by bankruptcy. Keep yourself well-informed and consult experts before filing.

Takeaway.

With all things said and done, the only thing left unsaid is to exercise caution. Be cautious of every step you make before you make it. Always keep experts in the loop, consult people who have filed before, do not try to hide any of your assets, and always be transparent. Go so far as consulting between experts. Opt for consistent decisions.

Good luck, and be smart!

Bankruptcy Forms and What You Need to Know About Them

Filing for bankruptcy can be an arduous process. It is complicated in its technicality and can be confusing in certain places. It would help if you had assistance, whether or not you are recording under Chapters 7 or 13.

Official US court sites give the official documentation for filing, which are printable and can be completed. You likewise may have to follow explicit prerequisites forced through the bankruptcy dealer of your general vicinity, which may include additional or different files. The dealer agent or a lawyer can clarify these prerequisites and instruct you on what is necessary. Sometimes, the court’s site will give the forms, too.

Form Submission

Bankruptcies and their proceedings are documented in federal courts only. All of the US states have at least one government legal locale. You should record in the locale of your main living place or where you’ve lived in for the 180 days preceding your document. (By and large, it is going to be a similar region). Business proprietors have a little extra alternatives to consider.

Forms of C7

Form b 101

The primary file in a C7 bankruptcy is the B 101, or the deliberate appeal. This will give you distinguishing information, notwithstanding information about previous forms, the end of your credit guidance, and other fundamental issues. If there’s an oust not in your favor, you should look into B 101A along with B 101B. On the off chance that you can’t pay the recording expense, you can request for payment of charge in portions from B 103A, else request a renunciationfor B 103B.

Form b 106

B 106 plus connected forms will give a rundown (or “timetable”) of your resources plus debts.B 106A and Bare meant for giving a timetable that deals with your holdings, B 106C is to give a timetable of your guaranteed exclusions, B 106D is to enlist and ensure correct lenders, B 106E or F are to enlist unstable banks, while B 106G is to enlist actionable deals yet-to-expire leases. Then,B 106H is to give the details belonging to partner account holders on your obligations, who should pay on the off chance that you don’t pay your obligations. B 106I deals with pay, while B 106J deals with month to month costs.

Form B 107 and Others

B 107 gives your Affairs Statement, that delineates, for example, your all-out pay in the course of the most recent two years, late installments to banks, continuous claims, ongoing property moves, plus assets of others in your temporary possession. B 108 is Intent Statementof your dealing with these with your obligations and yet-to-expire deals. B 121 social security details belonging to you. Forms B 122A-1 and B 122A-2 identify with the methods trial for the 7th Chapter qualification. They turn out your current month to month revenue and depict whether you need atest if your pay is more noteworthy than average.

Chapter 13 forms

The forms that an indebted person needs to document in 13relate as fairly comparable. B 101, B 101A and 101B plus B 106 along with others connected handle the very issues as 7. When recording for 13,the option to pay the documenting forgoing waivers is there, soB 103A plus 103B won’t assume a job. You won’t have to finish B 108 in 13. So, first finish B 121 to cater to Social Security details.

Chapter 13-Specific Forms

The filings explicit to 13 are B 122C-1 plus B 122C-2.B 122C-1 turns out your current month to month revenue and sets out the period in which you hope to finish your reimbursement.B 122C-2 turns out your dispensable revenue, which includes the assets utilized to issue installments under the arrangement. Notwithstanding the filings, present a different proposition for your reimbursement. It’s certifiably not a particular form and doesn’t follow a specific format; however, you can get some information regarding everything needed to be remembered for the arrangement.

Chapter 13 Eligibility Checklist

For those struggling with mounting debts who want to retain their assets, Chapter 13 bankruptcy can serve as a viable means for them to do. In Chapter 13, your debt repayment plans are rescheduled based on the court’s assessment of what you can afford for the duration of the bankruptcy – which is typically 3 to 5 years.

With that said, not everyone can qualify for a Chapter 13 bankruptcy. Here is a concise checklist of what is required:

1. Must have a total of $419,275 or less in unsecured debt and a total of $1,257,850 or less in secured debt.

2. The debtor seeking relief must be an individual and not a business entity (however, business-related debts for which the individual is personally liable can be included)

3. Provide proof that you are up to date on tax filings have enough income to meet monthly repayment obligations

4. In the preceding 180 days, neither had no preceding bankruptcy petition dismissed due to willful failure to appear before the court.

or Voluntarily had it dismissed after creditors sought relief from the court to repossess property upon which they hold liens.

5. Have completed a credit counseling course from an approved credit counseling agency within 180 days before the date of filing

#bankruptcy #bankruptcyattorney #bankruptcylaw #bankruptcylawyer #TX #BankrutpcyTX #Chapter13

Your Student Loan Debt CAN be Discharged Through Bankruptcy

There has been long a perpetuating myth that student loan debt in America cannot be wiped out by declaring bankruptcy. The truth is quite the opposite. A court can grant you a discharge provided you can prove it is causing you ‘undue hardship’.

Courts will use different tests to evaluate whether it might be causing you undue hardship. The commonly used is the Brunner test. Passing it requires you to prove that:

1. You and your dependents are unable to maintain the ‘minimal’ standard of living because of the debt

2. Additional circumstances exist that will make such a state of affairs to persist for a long period

3. You had made real effort to repay your student loan debt.

On the surface, this does make it seem that qualifying for a discharge might be difficult, but an empirical student from Villanova University found that judges have granted a hardship discharge to 40% of debtors who sought one.

In such a context, it may be surprising to find that 99.9% of debtors who have filed for bankruptcy don’t even attempt to discharge their student loans. With more and more individuals suffering from mounting student loan debt, it remains highly critical to raise awareness about how it could potentially be wiped out.

Link to the study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1894445

#bankruptcy #chapter13 #chapter7 #studentloans

Photo courtesy:  www.aboblist.com / CC2 (In comments)

Get A Fresh Start

Schedule a time to speak with an experienced Bankruptcy Attorney today!