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.


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).

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

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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.

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

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Planning for Chapter 7 Bankruptcy – 5 Quick & Helpful Tips

1. Any debt incurred after the bankruptcy filing date does not qualify as part of your discharge. Therefore, it is best to file when one is sure that they are reasonably sure that they won’t be incurring any further unmanageable expenses while during and after the bankruptcy process.

2. Include all qualifiable debts that you believe you won’t manage in your bankruptcy. Once a discharge is given, most debtors have to wait 8 years before qualifying for another debt discharge.

3. If you are moving to another state, time your bankruptcy filing accordingly. Depending on which state you are in and to which you are moving, it may be more advantageous to file while residing in the one with more generous exemption laws.

4. Be mindful of making large payments to preferred creditors, selling assets, or transferring them out of your name shortly before bankruptcy. It can raise suspicion of bankruptcy fraud, and the court trustee assigned to your case can get the money or property back using a clawback provision.

5. Don’t make the mistake of incurring any further debt shortly before filing for bankruptcy. The fact that you purchased items on credit knowing that you won’t pay the creditor back can make you subject to fraud allegations. Even if it does not result in a criminal investigation, the outcome could still be an objection to your discharge.

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