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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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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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