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Giving My Own Thanks During This Holiday SeasonIn my previous blog, I discussed the reasons that people in the U.S. can be thankful for our bankruptcy laws and the many attorneys and other professionals who help them through the process. As an attorney who practices in the areas of bankruptcy and family law, I have much to be thankful for myself. The Page Law Firm would not be what it is today – a source of legal solutions for people going through difficult situations –  without my many clients, colleagues, friends, and family members. In keeping with the spirit of the season, I would like to share what I am thankful for:

  • I am thankful for my clients who trust me to guide them through their financial difficulties and towards a better future. I know how crucial it is that you get the relief you need from the bankruptcy process.
  • I am thankful for my clients who trust me to help them make decisions about their marriages and children. I know first hand how those decisions impact today and the years to come.
  •  I am thankful to those same clients who refer me to their friends and family, allowing me to help them as well.
  • I am thankful for the laughter we share and the tears we shed throughout the process. The personal connections I form with you are one of the most rewarding parts of my job.
  •  I am thankful for my fellow lawyers who refer clients to me or contact me when they have questions. I am always happy to give answers and am grateful that you think of me when your clients need help.
  •  I am thankful for my friends who have referred their friends to me, putting their trust in me and helping me grow my practice.
  •  I am thankful for my family, who continues to support me on this journey called The Page Law Firm.

Help Is Here for Those in Need

Whether you are struggling to keep creditors at bay or have decided to divorce, you should know that you will not be alone in facing your challenge. At The Page Law Firm, we advise clients on whether filing for bankruptcy is the right solution for their debt problems and, if the answer is “yes,” guide them through the completion of the process. For those seeking a divorce, we provide compassionate legal support for sensitive issues such as child custody and try to create an amicable process whenever possible. To schedule a free consultation with a Frisco, Texas, bankruptcy and divorce lawyer at The Page Law Firm, call 214-618-2101 today.

Four Reasons to Be Thankful for BankruptcyThe holiday season is a time of year when people reflect on what they are thankful for. Family, friends and good health are often at the top of people’s lists. You are likely not thankful for financial circumstances that make filing for bankruptcy necessary, but you can instead be grateful for the bankruptcy laws and process that will help you get out of debt and on the path towards financial recovery. Here are just four reasons you may be thankful for bankruptcy:

  1. You Receive an Automatic Stay: One of the most stressful parts of being in debt is dealing with aggressive creditors and debt collectors. You may receive frequent communications, demanding repayment and threatening legal action and repossession. The first thing that filing for bankruptcy does is put an automatic stay on all debt collection efforts. That means no more phone calls or letters. If creditors are in the process of filing a lawsuit or foreclosing on your home, those actions will be put on hold.
  2. You Have Several Property Exemptions: Chapter 7 bankruptcy repays your creditors by selling your assets and distributing the proceeds. Fortunately, there are exemptions that will protect properties from being sold. In Texas, exemptions are pretty generous, which means in almost every case that your home, cars, jewelry, furniture, retirement, and pension plans are protected.
  3. You Can Discharge Your Debts: Once you have finished the bankruptcy process, most of your unsecured debts will be discharged. This means that you are clear of the obligation to repay any of these creditors. For secured debts such as home mortgages, the creditor may be able to repossess the secured property. However, if you want to keep the secured property, you can reaffirm your debt and keep making your payments on the remaining amount on the debt.
  4. U.S. Bankruptcy Laws Are Favorable to Consumers: There are many countries around the world that do not have bankruptcy laws or systems in place. Others have bankruptcy laws for businesses but not for consumers. Without a personal bankruptcy system, consumers in these countries have no protection against creditors if they become insolvent and default on their debts. The U.S. has federal bankruptcy laws that make the process consistent across the country, rather than having a process that may greatly vary by state.

Contact a Denton County Bankruptcy Lawyer

Consumers across the U.S. are fortunate to have experienced bankruptcy lawyers available to help them through the process. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can discuss the advantages of filing for bankruptcy. To schedule a free consultation, call 214-618-2101.

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What to Do If You Lose Your Job During BankruptcyYour job income plays a major part in how you file for bankruptcy. Your current monthly income (CMI) determines whether you automatically qualify for Chapter 7 bankruptcy or need to take the Means Test. If your income is too high for a Chapter 7 bankruptcy, then you can file a  Chapter 13 bankruptcy, which uses your income and certain expenses to determine your monthly payments. Losing your job during your bankruptcy case could have a significant effect on the process. In this situation, it is critical to immediately inform your bankruptcy lawyer about your unemployment so you can discuss how you will respond.

Chapter 13 Repayment Plan

If you already qualified for Chapter 7 bankruptcy, becoming unemployed should not change your status. On the other hand, losing your job income will affect your ability to make Chapter 13 bankruptcy payments because you will have less disposable income. If you will not be able to afford your next monthly payment, you must not miss the payment without any explanation because the bankruptcy trustee could file a motion to have your case dismissed, allowing your creditors to take debt collection action against you. Instead, your bankruptcy attorney can help you through legal action, such as:

  • Converting your case to a Chapter 7 bankruptcy
  • Creating a new repayment plan with reduced monthly payments through a modification 

A modification will take into consideration your current income and expenses. Depending on the number of months initially proposed in your plan, you might be able to extend the time of your plan, but a plan cannot exceed 60 months. 

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When Should Senior Citizens Consider Filing for Bankruptcy?Senior citizens who are in debt may look at bankruptcy differently than someone younger. Their incomes are often lower than when they were working, making it more difficult to pay their debts on their own. They may also have a lot to lose if a creditor obtains a judgment against them and they have accumulated valuable assets during their lives. Bankruptcy may not be right or necessary for every senior who is struggling with debt, but many seniors could benefit from the process. If you are a senior citizen, here are three situations in which you should strongly consider filing for bankruptcy:

  1. Your Medical Bills Are Piling Up: It is an unavoidable fact that your medical expenses will increase as you get older. You will have more visits to the doctor to monitor your health and are at greater risk of needing an expensive medical procedure or your monthly medications are incredibly expensive. A run of bad luck with your health can leave you with outrageous medical bills that your health insurance does not completely cover. By filing for bankruptcy, you can potentially discharge those bills in a matter of months or enter a manageable repayment plan.
  2. You Are Still Working: Some seniors continue to work beyond the age that they expected to retire, usually because they need the income. Others start a second career at a new job to keep themselves busy after retirement. If your creditors receive a judgment from a court, the creditors can obtain writs of attachment and begin seizing assets as one of their means of enforcement. They cannot take from your social security money or retirement benefits that you have not withdrawn, but they can take from the income you are earning at your job. Filing for bankruptcy will put an automatic stay on collection activities.
  3. You Have Valuable Assets You Need to Protect: Seniors often have a large amount of equity in their homes and vehicles. If you are at risk of defaulting on your home mortgage or vehicle loan, bankruptcy can protect your equity in those properties. Texas’s homestead exemption allows you to exempt your total equity in your home during bankruptcy. Texas’s motor vehicle exemption allows you to exempt one vehicle per licensed member of your household or a vehicle used to transport an unlicensed household member. The second part of the vehicle exemption is relevant for seniors who are no longer allowed to drive but still own a vehicle.

Contact a Frisco Bankruptcy Attorney

Filing for bankruptcy is an important decision that you should discuss with a professional. A Denton County bankruptcy lawyer at The Page Law Firm can advise you on whether bankruptcy would be useful in your situation. Schedule a free consultation by calling 214-618-2101.

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How Bankruptcy Can Cure You of Medical DebtMedical bills are one of the top sources of unpaid debts in the U.S. According to a recent academic study, two-thirds of the people who file for bankruptcy cite medical issues as one of the key factors that led to their decision. Expensive medical treatment can have a compound financial effect on patients:

  • Patients may lack adequate health insurance coverage or savings to pay for an unexpected health problem.
  • The patient may lose income if the injury causes a temporary or permanent disability that prevents them from returning to work.

If your healthcare debt becomes overwhelming, bankruptcy allows you to discharge your unpaid medical bills or repay them perhaps at a reduced cost.

When to Consider Bankruptcy

If you have good credit and little debt other than your medical bills, you should explore repayment alternatives before choosing bankruptcy. You may qualify for an assistance program that will reduce what you owe. However, some hospitals do not offer assistance programs, while others may have strict income limits to qualify. You also must consider your ability to repay other debts, such as credit cards and a home mortgage. Bankruptcy is a means of managing all of your creditors at once and can be an excellent strategy to help get you back on track

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HAVEN Act Protects Veteran’s Disability Benefits During BankruptcyMilitary veterans can be vulnerable to financial struggles after they return to civilian life. According to U.S. Census data:

  • Approximately 125,000 veterans filed for bankruptcy in 2017;
  • Veterans accounted for 14.7 percent of the people who filed for Chapter 7 bankruptcy; and
  • Veterans accounted for 15 percent of the people who filed for Chapter 13 bankruptcy.

Disabled veterans, in particular, may struggle to find and keep employment and often rely on their veteran’s disability benefits. A federal law enacted in August provides new protections from creditors for those disability benefits when a veteran files for bankruptcy. 

The HAVEN Act

The Honoring American Veterans in Extreme Need (HAVEN) Act was signed on Aug. 23, after the bill passed both chambers of Congress with bipartisan support. The act states that specified federal disability payments for veterans will be excluded when calculating a bankruptcy filer’s income. Qualified disability benefits include:

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How to Know When Bankruptcy Could Help with Your Student LoansMore than 44 million borrowers in the U.S. owe approximately $1.5 trillion in student loan debts, according to 2019 statistics from the Institute of College Access and Success. Recent college graduates make up many of those who are in debt. For instance, 2017 graduates owe an average of $28,650. Young professionals are particularly vulnerable to falling behind on student loan payments because they likely are not earning enough income to make payments and support themselves. At what point should you file for bankruptcy in response to your student loan debt? There are several situations in which bankruptcy may be one of your strongest options for solving your student debt crisis:

  1. You Have Defaulted on Your Loan: Your lender will consider you in default of your student loan if you have not made payments in 270 to 360 days. At that point the lender may file a lawsuit against you, seeking full recovery of what you owe. Your lender does have the ability to garnish your wages. Filing for bankruptcy will put an immediate stay on the lawsuit, as well as wage garnishment, and give you time to consider your options.
  2. You Are Running Out of Repayment Options: Lenders, particularly those with federal student loans, may offer repayment and forgiveness programs that will reduce what you owe or temporarily lower your payments. However, these programs may be insufficient if your loans are high or you lack the income to make even minimum payments. With these options exhausted, bankruptcy may be your only way to restructure your total debt obligations, which could give you the ability to get on track with student loan repayment.
  3. Your Student Loans Are Causing Financial Hardship: In order to discharge your student loan debt at the end of your bankruptcy, you will need to show that making payments will cause you undue hardship. Using the Brunner test, a court may consider you eligible for discharge if you could not maintain a minimal standard of living while making payments, are unlikely to improve your financial situation for the duration of the repayment period and have made good-faith efforts to keep up with payments.  However, this a very high burden to meet and is rarely met.
  4. You Have Other Debts: Your student loans might be just one source of debt, along with credit card debts and car loan payments. Even if you do not qualify to discharge your student loans, bankruptcy could allow you to discharge other debts and leave more money available for student loan payments.

Contact a Colin County Bankruptcy Lawyer

Approximately 2.9 million Texas residents owe $85.4 billion in student loan debt, which is the second-highest for any state in the U.S. Most of them will not default on their student loans, but it can be difficult to keep up with loan payments and the increasing cost of living. If you are falling behind on payments with no signs of relief, a Frisco, Texas, bankruptcy attorney may be able to help. Call 214-618-2101 to schedule a free consultation with The Page Law Firm, so you can determine whether bankruptcy is the right solution for you.

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How Bankruptcy Can Help When Facing a Credit Card LawsuitCredit card companies have the right to file a lawsuit against you if you have not paid the balance you owe. They will not immediately sue you after your first missed payment but may consider it if you have not paid in several months and are uncooperative. Texas has a four-year statute of limitations on collecting unpaid debts, and credit card companies may feel pressured to take legal action before the deadline passes. There are several ways to respond to a lawsuit and protect yourself, including filing for bankruptcy. 

How a Lawsuit Works

A credit card company files a lawsuit in hopes of getting a court judgment that forces you to pay what you owe. The process starts when you are served notice of the complaint against you and a summons for a court hearing on the lawsuit. You have to respond to the summons, and failing to respond could result in the court issuing a default judgment in favor of the credit card company. With a court judgment, the credit card company could use more forceful means of debt collection, such as bank levies and liens on your property and, if the judgment is from a state other than Texas, wage garnishment. 

Your Response

There are several ways that you can prevent a court judgment against you in a credit card lawsuit, including:

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Do Not Let Your Income Discourage You From Chapter 7 BankruptcyFiling for Chapter 7 bankruptcy may be your preferred option, depending on your debts and assets. The Chapter 7 process is quicker than a multiyear repayment plan and still allows you to protect many of your important assets. Some bankruptcy filers are discouraged from attempting Chapter 7 bankruptcy because of the Chapter 7 bankruptcy means test. A test sounds like an obstacle that is meant to prevent people from using Chapter 7 bankruptcy unless they have a below average income. However, that is not how the test works. Here are four facts about the means test that you should understand:

  1. Many Filers Do Not Take the Test: The means test is required only if you have a median household income that is at or above your state’s median income. Anyone with an income below the state median does not have to take the test to qualify a for Chapter 7 bankruptcy. 
  2. Many People Pass the Means Test: The Chapter 7 bankruptcy means test was created to determine whether someone has enough disposable income to afford a Chapter 13 bankruptcy repayment plan. Bankruptcy law assumes that people below the state median income cannot afford it, but people at or above the median may be unable to afford it as well. Your disposable income is the money left over from your income after necessary expenditures. You will pass the test as long as your disposable income is too low for you to reasonably sustain a meaningful repayment plan.
  3. Identifying Expenses Helps: When calculating your disposable income, it is important to list all of your financial obligations that take away from your regular earnings. These could include taxes, healthcare, insurance, childcare, court-ordered payments, and secured debt payments. These expenses help reduce your disposable income and can help you qualify for Chapter 7.
  4. When You Take the Test Can Make a Difference: The means test calculates your median income based on your income for the past six months. 

You can fail the test and still qualify for a Chapter 7 bankruptcy.  There is a process called rebutting the presumption.  This is why you need to consult with an experienced attorney.

Contact a Frisco, Texas, Bankruptcy Attorney

You should not dismiss Chapter 7 bankruptcy as an option without first consulting a knowledgeable attorney. A Denton County bankruptcy lawyer at The Page Law Firm can evaluate your financial situation and tell you which type of bankruptcy will work best for you. Schedule a free consultation by calling 214-618-2101.

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The Short-Term and Long-Term Benefits of BankruptcyBankruptcy may have a negative stigma for people who do not understand what the process means. Bankruptcy is a solution to your debt problems, not a symptom of them. You file for bankruptcy to stave off creditors and ultimately clear yourself of eligible debts that are causing you stress and threatening your financial security. When filing for bankruptcy, you should understand that there are immediate and long-term benefits.

Immediate Benefits

You will immediately notice the effect of filing for bankruptcy because it will enforce an automatic stay on your creditors. This means an immediate stop to:

  • Persistent phone calls and letters about repayment;
  • Looming litigation by your creditors;
  • Garnishment of your wages by the IRS and student loan lenders; and
  • Imminent foreclosure or repossession of your properties.

The automatic stay gives you time to assess your financial situation and how you wish to proceed with the bankruptcy process. It is difficult to concentrate on making those decisions if you are worried that the bank is about to foreclose on your home.

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Five Ways to Recognize Debt Collection ScamsPeople who are in debt can be more susceptible to debt collection scams. When you are worried about debt collectors, a threatening phone call or letter seems believable. At the very least, you do not think you can ignore it. Some scams involve debt collection agencies using illegal practices, while others are from people who are merely posing as a collection agency. How do you know whether an alleged debt collector is trying to scam you? An attorney can tell you, but there are also several warning signs that you can look for:

  1. You Do Not Recognize the Debt: While you may not know every outstanding debt you owe off the top of your head, you probably have a good idea of the creditors that you have done business with. You should be skeptical if you do not recognize the name of the creditor or the amount of money that the collector claims you owe. Take time to check your credit report or other records to confirm whether the debt is real.
  2. The Collector Is Asking for Basic Information: The creditor or collection agency should already have your basic information on file, such as your address, date of birth, and the number of any account related to the debt. If the person you are talking to is asking for this information, they may be fishing for your personal information in order to commit identity theft.
  3. The Collector Threatens to Have You Arrested: Creditors do not have the authority to demand your arrest if you do not pay your debts. At most, they can take civil action by filing a lawsuit against you. It is illegal for creditors to lie by claiming that they can bring a criminal action against you. Someone who threatens you with arrest is likely a scam artist who is trying to make you panic.
  4. The Collector Is Pressuring You to Pay Immediately: A scam artist does not want to give you time to think about what they are asking for because you will likely realize that it is a scam. Instead, they will offer an easy way for you to send them money, such as a wire transfer or online portal. These payment methods may be untraceable, making it difficult for authorities to track down the person or entity that stole your money.
  5. You Cannot Find Information About the Collection Agency: You should be immediately suspicious if the person you are talking to refuses to give you the name of the debt collection agency or contact information. Even if they do give that information, you can search on the internet to see whether this agency is a legitimate company.

If you are being harassed in this manner, it’s probably a good time to consider bankruptcy. 

Contact a Frisco Bankruptcy Attorney

When you are considering filing for bankruptcy, you should not pay any debt collectors without consulting your attorney. A Denton County bankruptcy lawyer at The Page Law Firm may be able to help you discharge that debt instead of paying it. Schedule a free consultation by calling 214-618-2101.

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How Self-Employment Affects Filing for BankruptcyWith the recent changes in the economy and business hiring practices, an increasing number of workers are self-employed, either by choice or out of necessity. Self-employment can be working as an independent contractor for a business or being the sole proprietor of your own business. When faced with overwhelming debt, self-employed workers have the right to file for bankruptcy like anyone else. However, steps such as verifying their income can be more complicated.

Income Verification

Calculating your monthly income is an important step when filing for bankruptcy because it can determine whether you file under Chapter 7 or Chapter 13 bankruptcy. The Chapter 7 bankruptcy means test uses your current monthly income over the past six months prior to the filing of your case to decide whether you qualify for Chapter 7. In Chapter 13 bankruptcy, your income will determine how much you will repay your unsecured creditors (i.e. credit cards, medical bills, signature loans). Verifying your monthly income is more complicated if you are self-employed because your income may come from various sources and may be inconsistent depending on how regularly you receive work. Self-employed workers can verify their monthly income by presenting:

  • Check stubs;
  • Invoices;
  • Contracts;
  • Bank statements;
  • Tax returns; and
  • Signed statements from the party that paid them.

Many self-employed workers are able to qualify for Chapter 7 bankruptcy because they have less disposable income.

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What to Ask When Considering Whether to Reaffirm Your Mortgage After BankruptcyThere are many secured loans that you could decide to reaffirm after completing Chapter 7 bankruptcy, but your home mortgage may be the most consequential one. Discharging your mortgage does not remove the mortgage company’s lien on your home. The mortgage company can foreclose on your home if you do not continue to make regular mortgage payments. While it is possible to continue making payments without reaffirming the mortgage, a reaffirmation agreement creates personal liability on the loan. It is important to note that reaffirming a mortgage is not the best option for every bankruptcy case. Because the Bankruptcy Code does not require a reaffirmation for real property (your home) unlike personal property (your car), there are several questions you should ask yourself before making that decision:

  1. Will I Be Able to Keep Up With the Payments?: Reaffirming your mortgage means you will again have personal liability for the loan. However, you may have some advantages that did not exist before your bankruptcy. Discharging debts after bankruptcy may allow you to put more of your income towards your mortgage. You should calculate your monthly budget before you reaffirm any debts.
  2. Was My Mortgage the Primary Reason I Filed for Bankruptcy?: The great thing about discharge is that it frees you from a debt obligation, even though in some instances that means you cannot keep the property. Reaffirming your mortgage may undo one of the primary benefits of bankruptcy. You should also consider the value of the property and the equity you have in it. You may be better off letting your mortgage company foreclose on your home if your mortgage is underwater--meaning that you owe more on the mortgage than the property is worth.
  3. What Are My Other Housing Options?: You obviously have to live somewhere else if you allow the mortgage company to foreclose on your home. Do you have another place in mind where you can move? Will it accommodate yourself and your family? How much will the new home cost? You need to answer all of these questions before surrendering your home.
  4. What Would Happen If I Defaulted on the Mortgage?: The mortgage company will most likely foreclose on your home if you start to miss payments again. If you have signed a reaffirmation agreement,  the mortgage company can hold you liable if you owed more on the mortgage than what the mortgage company received by selling the property.

Contact a Frisco, Texas, Bankruptcy Lawyer

You can plan ahead during your bankruptcy for whether you want to reaffirm your mortgage. A Denton County bankruptcy attorney at The Page Law Firm can discuss the advantages and disadvantages of reaffirmation. Schedule a free consultation by calling 214-618-2101. 

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Pros and Cons of Reaffirming a Car Loan After BankruptcyWe recently discussed whether you should continue to lease a vehicle when you are filing for bankruptcy. You are more likely to have to decide whether you will reaffirm your car loan. In a Chapter 7 bankruptcy case, you can surrender (give back your car) and discharge remaining debts at the end of your case. With a reaffirmation agreement, you keep the vehicle in exchange for continuing to make loan payments. However, you should carefully consider the consequences before you enter such an agreement.

Why You May Want to Reaffirm

Texas bankruptcy law has a generous motor vehicle exemption that can prevent a Chapter 7 bankruptcy trustee from selling your vehicle. You are allowed to exempt the full value of one vehicle per member of your household with a driver’s license. You can also exempt a vehicle if an unlicensed member of your household relies on someone else using a vehicle to transport him or her. However, if you do reaffirm, a bankruptcy exemption does not prevent a lender from repossessing your vehicle after bankruptcy if you are behind on your loan payments. A lender may offer you a chance to reaffirm the loan because it would prefer you to continue paying back the loan. A reaffirmation agreement can be advantageous to you because:

  • You will keep the vehicle;
  • You may be able to negotiate more favorable terms for the loan; and
  • Paying the loan can help rebuild your credit rating after bankruptcy. 

Why You May Not Want to Reaffirm

You filed for bankruptcy in order to relieve yourself from debts. By reaffirming your loan, you are renewing your debt obligation and leaving yourself vulnerable if you cannot keep up with your payments:

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Federal Employees Expected to Continue Bankruptcy Payments Despite ShutdownThe federal government shutdown is nearing a month, and federal employees have started to miss paychecks. Losing your job income can put a strain on anyone’s budget, but people with a Chapter 13 bankruptcy repayment plan feel under particular pressure. Filers agree to court orders to make regular payments to their creditors, and the payment amounts are based in part on their regular income. When a federal employee going through Chapter 13 bankruptcy stops receiving pay, he or she may not have the money available to make the scheduled payments. 

Missing Bankruptcy Payments

A Chapter 13 bankruptcy trustee receives your payments and distributes them to your creditors. The trustee can file a motion to dismiss your case if you repeatedly miss payments, which would require you to:

  • Fulfill your missed payments;
  • Motion to modify your payment plan; or
  • Allow the dismissal and attempt to refile for bankruptcy.

During the previous government shutdown in 2013, some bankruptcy trustees were willing to delay a motion for dismissal when a federal government employee missed a payment. However, this government shutdown has already lasted for longer than any other on record, and it is unclear when a resolution will be reached. We do not know how patient trustees will be if bankruptcy filers are forced to continue to miss payments.

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Should You Continue Your Vehicle Lease During Bankruptcy?Protecting your motor vehicle is often a priority during your bankruptcy. In a Chapter 7 case, different rules apply when you are leasing a vehicle. Monthly lease payments may be cheaper than loan payments, but you do not actually own the vehicle. Chapter 7 bankruptcy filers must decide whether they will assume or reject their vehicle lease.

Assuming the Lease

Filing for bankruptcy puts an automatic stay on your vehicle lessor’s attempts to repossess your leased vehicle. The bankruptcy trustee technically has 60 days to claim your lease, but this is rarely done because the trustee would need to find someone else who would be willing to pay more than you to lease the car. You should decide whether you want to assume the lease before that deadline. You can keep the vehicle by assuming the lease, but:

  • You will be responsible for continuing payments under the lease contract;
  • The lessor can reject your request to assume the lease and try to repossess the vehicle (but that rarely happens); and
  • The lessor can repossess the vehicle if you cannot keep up with payments.

Chapter 13 bankruptcy can help you keep your leased vehicle if you are behind on lease payments because you can include the payments in your long-term repayment plan.

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Actions to Avoid Before Filing for BankruptcyThere are several actions you can take to help prepare yourself to file for bankruptcy. However, it is also important to understand what you should not do. Creditors will examine your financial activity leading up to your bankruptcy to spot instances of potentially fraudulent activity, which they can attempt to use to hold you liable for your entire debt. Other actions may be legal but needlessly drain resources that your bankruptcy could have protected. Here are four things you should not do before filing for bankruptcy:

  1. Incurring Large Debts Right Before Filing: It is extremely rare for individuals to run up their credit cards in order to prevent paying by filing bankruptcy. However, it is fraudulent to incur debts that you have no intention of paying. Once you have consulted with a bankruptcy attorney, you should avoid using any credit cards. A creditor may accuse you of fraud if you use credit to purchase luxury goods or services within 90 days of the date of your bankruptcy filing.
  2. Attempting to Hide Assets: Intentionally omitting assets during bankruptcy can cause your case to be dismissed. Selling or transferring assets right before bankruptcy might be fraud, and a bankruptcy court may cancel the transfer or dismiss your case. You should consult with your bankruptcy attorney before you sell any assets.
  3. Repaying Creditors in Advance: Bankruptcy has a process for prioritizing which creditors must be repaid. Paying back an unsecured creditor immediately before bankruptcy is unnecessary and potentially a waste of assets. It is possible that the bankruptcy would not require you to repay that creditor in full. You may have been able to save that money or used it to pay a debt that you cannot discharge (such as your student loan obligation or certain taxes) or your secured obligations that must be paid in order to keep the collateral (such as mortgage and car payments).
  4. Withdrawing from Retirement to Pay Debts: You may feel tempted to borrow money from your retirement account in order to repay creditors without filing for bankruptcy because your debts are a more immediate concern than saving money for your retirement. Not only are you stealing from your future income, but you may pay a penalty for making an early withdrawal from your retirement account and you lose the benefit of compounded interest over time. Bankruptcy exemptions allow you to protect your retirement money. You can clear your debts while keeping your retirement intact.  And this will be critical in your retirement years. 

Contact a Denton County Bankruptcy Attorney

Hiring a bankruptcy attorney is vital towards using the process to best clear your debts. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can guide your decisions leading up to and during your bankruptcy. To schedule a free consultation, call 214-618-2101.

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Senior Can Use Bankruptcy to Protect Assets from CreditorsDebt has become an increasing problem for senior citizens, who do not have the same income stream to keep up with their payments as they did when they were still working. Several factors are contributing to the rise of senior debt, including:

  • Increasing health care costs;
  • Social security no longer being sufficient income to meet daily, necessary expenses; and
  • Retirement accounts depleted by the recent recession.

Your debts can pile up because of your reduced retirement income and increased need for doctor visits and medical treatments. Rather than depleting your retirement savings to pay off your debts, you should see whether filing for bankruptcy may help. Bankruptcy laws protect many of the assets that senior citizens need. 

Social Security

Your Social Security benefits during a Chapter 7 bankruptcy case are protected from your creditors, as long as you keep that money separate from other funds. Social Security money is vulnerable to a bank levy if it is co-mingled with other money in a bank account. This includes mixing it with money you receive from your retirement accounts. The best way to avoid this is to create a separate bank account for your Social Security income. In Chapter 13 bankruptcy, the Social Security benefits you receive each month are not considered part of your income used to determine your repayment plan.

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Monitoring Proof of Claim Filings After BankruptcyCreditors must file a proof of claim in order to receive payments as part of a bankruptcy case. This practice occurs in Chapter 13 bankruptcy cases and Chapter 7 cases in which there are assets available to be distributed. As of Dec. 1, 2017, the Federal Rules of Bankruptcy Procedure enacted new rules regarding filing a proof of claim:

  • It clarified that secured creditors are required to file a proof of claim; and
  • It shortened the deadline for a non-governmental creditor to file a proof of claim from 90 days to 70 days.

Both of these changes are meant to favor the debtor in a bankruptcy case. The shortened deadline may allow a Chapter 13 bankruptcy filer to know sooner what claims the creditors have in the case. Debtors must monitor proof of claim filings to determine whether they need to contest a filing.

Reasons to Contest

Debtors can file a written objection to a proof of claim. Reasons for objection may include:

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Why Delaying Bankruptcy Can Be CostlyPeople who are heavily in debt may worry about the cost of filing for bankruptcy, but delaying an inevitable bankruptcy is often costlier. Bankruptcy is neither a sign of failure nor the ruin of your personal finances. Yet, some people let these misconceptions prevent them from filing for bankruptcy when it may be their best option. While there may be some immediate costs to bankruptcy, it is a chance for people to clear their debts and start anew. There are several reasons why waiting to file for bankruptcy can make your situation more difficult:

  1. Quality of Life: The pressure of repaying debts can affect your standard of living and personal health. Some debtors save money by forgoing necessary expenses, such as food and medical treatment. The stress can be harmful to a person’s mental and physical health. Bankruptcy protects the money you need to pay for basic living expenses and gives an eventual resolution to your stress.
  2. Risk of Litigation: You may be content to slowly repay your debts, but your creditors may not display the same patience. By filing a lawsuit against you, your creditor is seeking immediate compensation for the debts you owe through mechanisms such as attaching your bank accounts. You still have time to file for bankruptcy, but the lawsuit puts you on the defensive and requires you to act quickly.
  3. Wasted Assets: Filing for bankruptcy allows you to protect key properties through the various exemptions available. Your home, vehicle and other properties of a certain value can all be exempt from your creditors. However, people who avoid bankruptcy may choose to sell important properties to help with repayment. If they eventually file for bankruptcy, it will be too late to exempt and save properties that have already been sold.
  4. Rising Debt: Some people try to avoid bankruptcy because they believe they can get by with their own repayment plan. However, keeping up with debt payments can be difficult if you lack the financial resources. Making minimum payments may prevent immediate default, but will allow interest rates to accumulate on the debts. If a Chapter 13 bankruptcy is filed, you will be facing a larger debt that may have to be paid in full, depending on your repayment plan.

Deciding on Bankruptcy

It can be difficult to know when is the right time to file for bankruptcy. Bankruptcy is an option you should at least consider if you are feeling overwhelmed by your debts and are unsure of how to repay them. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can advise you on how bankruptcy could help your financial situation. To schedule a free consultation, call 214-618-2101.

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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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