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Why You Should Not Withdraw from Your Retirement to Pay DebtsWhen you are going through a financial crisis, your focus is on meeting your immediate needs and not your long-term savings. The coronavirus outbreak is creating a financial crisis for the people who have lost their jobs or seen a reduction in their income. It is understandable to justify withdrawing money from your 401(k) if you need to pay your mortgage or a vehicle loan. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act of 2020”) has made it easier for people to withdraw from their retirement accounts. People younger than 59 ½ years old will temporarily be allowed to withdraw up to $100,000 from their 401(k), 403(b) or Individual Retirement Account (IRA) without a 10 percent penalty or borrow up to $100,000 with a longer repayment period. Even though there is no penalty for withdrawing, this is still a taxable event, but the taxes can be paid over a three-year period, rather than all at once next year. However, you should consider other options, including bankruptcy, before you make a withdrawal that could jeopardize your retirement. You lose the time value of your invested funds working for you over a 20 or 30 year period.  

Relief for Consumers

The CARES Act of 2020 includes several provisions that may help you with your debts and personal expenses. Most people know about the one-time payout of $1,200 that most individuals will receive, but the law also:

  • Adds additional funds and weeks for unemployment
  • Provides foreclosure moratorium for 60 days
  • Allows people to forbear their federally backed mortgage payments for up to 12 months
  • Suspends payments on federally backed student loans until September 30th 
  • Excludes stimulus payments from their income if they file for bankruptcy
  • Extends the maximum repayment period for Chapter 13 bankruptcy plans that have been approved by the Court from five years to seven years

Some creditors have also shown some willingness to be flexible with their customers who have been financially affected by the coronavirus outbreak, such as delaying collection action or modifying loan agreements.

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How the Coronavirus Could Affect BankruptcyThe world is experiencing a global pandemic with the rapid spread of the coronavirus causing cases of COVID-19. Dozens of cases have been reported in Texas, even here in Frisco, and the number is likely to grow as more people are able to be tested. While the public health threat is the priority, there are also concerns about the economic impact it will have. Businesses around the world are shutting down to the public, and the stock market has dropped to historic lows. If the economic effects of the coronavirus pandemic cause you to fall behind on your debts, you may want to consider bankruptcy as a source of relief. If you have an ongoing bankruptcy case, you need to watch for how the pandemic may affect your case.

Virus Impact on Personal Finances

To prevent the spread of the virus, many offices, stores, and restaurants are closing – either voluntarily or by government mandate. Employees may be okay if they can work from home or their employer is willing to pay them during their time off. However:

  • Some workers are going unpaid or are having their payments deferred while their employers are closed.
  • Small business owners may see decreased revenues that hurt their personal finances.
  • There is no telling how long employers will continue to pay workers who are on leave.

People who live paycheck-to-paycheck or are desperately trying to keep up with debt payments may not be able to afford a gap in their income. Creditors may show more patience given the extraordinary circumstances but are not required to do so. If a creditor is threatening to repossess your property or file a lawsuit against you, filing for bankruptcy will put an immediate stop to it and allow you to manage your debts.

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What to Do if Creditors Disobey the Automatic StayFiling for bankruptcy provides relief in many ways, and one of the immediately noticeable ways is the automatic stay on creditors. After you have filed, creditors are legally required to stop contacting you or attempting to collect on their debt. This includes:

  • Calling you or sending letters
  • Foreclosing on or repossessing your property
  • Turning off your utilities
  • Garnishing your wages
  • Filing or continuing a lawsuit

The IRS is still allowed to send notices of tax deficiencies, and the automatic stay will not stop a court action that is trying to establish child support. Otherwise, you should stop hearing from creditors in a matter of days, if not immediately. If a creditor continues to harass you after you have filed for bankruptcy, you need to talk to your bankruptcy lawyer about how to stop the creditor and whether you should take legal action against them.

Determining Your Response

How you respond to a creditor continuing their debt collection action against you depends on whether the creditor knowingly violated the automatic stay. On your end, you can check whether you forgot to include the creditor in your bankruptcy filing, which would explain why they were unaware of the automatic stay. If the creditor is already listed in your bankruptcy, you need to notify them of the automatic stay and tell them to cease all communications and debt collection efforts. Your lawyer can prepare the message to make sure that the creditor can confirm your bankruptcy case. Warning the creditor will be enough to stop them in many cases. 

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A History of Bankruptcy Laws in the United StatesAs we celebrate Presidents Day, it is a good time to recognize how our bankruptcy laws have grown under different presidents. Our bankruptcy system is formed from federal laws passed by Congress and signed by presidents – all based on the belief that individuals and businesses should be able to eliminate debts that they are unable to repay. Before the existence of bankruptcy laws, debtors were powerless to stop creditors from seizing their properties or having them imprisoned for not paying their debts. Getting out of debt was often impossible unless you had wealthy or influential friends. A timeline of U.S. bankruptcy law shows that the principles of bankruptcy are older than the country itself. 

  • U.S. Constitution, 1787: The framers of the U.S. Constitution wrote a section that authorized the U.S. Congress to create federal bankruptcy laws. In the absence of federal laws, each state had its own laws on how bankruptcy should be administered.
  • Bankruptcy Act of 1800: The first attempt at a federal bankruptcy law came during the administration of President John Adams. The act was very different from the bankruptcy we know today. Only creditors could initiate bankruptcy, the system was exclusively for merchant debtors, and two-thirds of the creditors had to approve of discharge. The act was repealed in 1803, due to complaints of corruption associated with the law.
  • Bankruptcy Act of 1841: The next attempt at a federal bankruptcy law came during the early days of President John Tyler. The act greatly expanded bankruptcy protection so that it was available to all individuals and could be entered voluntarily. Federal courts, and not the creditors, would decide whether to discharge debts. However, the act was repealed in 1843, due to pressure from creditors.
  • Bankruptcy Act of 1867: The U.S. Congress passed a third bankruptcy act during the presidency of Andrew Johnson. This act introduced the idea of a restructured repayment plan that was a precursor to Chapter 13 bankruptcy. Bankruptcy filers were also allowed to choose between federal and state bankruptcy exemptions. The act was repealed in 1878, due to complaints that the law was being abused.
  • Bankruptcy Act of 1898: This act, passed during President William McKinley’s administration, was the basis for modern U.S. bankruptcy law. Among other new provisions, the act made it easier for debtors to obtain discharge at the end of their bankruptcies. The act has never been repealed, though significant portions have been revised and replaced.
  • Bankruptcy Reform Act of 1978: Major changes came to U.S. bankruptcy law during the presidency of Jimmy Carter. The reform act established the modern bankruptcy code, including the various chapters of bankruptcy. There have been various amendments to the bankruptcy act since then.
  • Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: President George W. Bush signed this law in April of 2005 and it became effective in October of 2005, making it much harder for individuals to discharge debts in Chapter 7 and to establish repayment guidelines for Chapter 13.

Contact a Frisco, Texas, Bankruptcy Attorney

Bankruptcy has come a long way since the founding of the U.S., and many of its changes have given more power to individuals who owe debts. A Denton County bankruptcy lawyer at The Page Law Firm can utilize the numerous bankruptcy tools that the U.S. offers to help with your case. To schedule a free consultation, call 214-618-2101.

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How to Find the Right Bankruptcy Attorney for YouWhen you are considering filing for bankruptcy, do not overlook the importance of who you pick to be your bankruptcy attorney. A good bankruptcy attorney can tell you whether bankruptcy is the right choice given your financial position and, if so, guide you through the process as smoothly as possible. Ensuring that you are able to discharge eligible debts and protecting your assets will be your attorney’s top priorities. How do you find someone who is not only a good bankruptcy attorney but the right fit for you? Keep these pointers in mind when you start your search.

Reviewing Your Options

It is easy to find the names of bankruptcy lawyers that work near you. Typing “Texas bankruptcy lawyer” into a web search engine will give you more results than you know what to do with. How do you narrow down your choices from there? First, your attorney needs to be someone who:

  • Practices the type of bankruptcy law that you need, such as consumer bankruptcy
  • Practices in the area where your case needs to be filed based on where you live
  • Has a track record of success with bankruptcy cases

Testimonials and referrals can point you towards bankruptcy attorneys who have good reputations. Talk to someone who has filed bankruptcy. If you have worked with an attorney in another practice area, ask them for a recommendation of a bankruptcy attorney. Visit online law directories and websites to see reviews and accolades that local attorneys have received.

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Resolving to File for Bankruptcy in 2020One of the most popular New Year’s resolutions that people make each year is to improve their physical fitness. Why not resolve to improve your financial fitness? Filing for bankruptcy may be your first step towards financial wellness if you have debts that you are unable to repay. Bankruptcy puts an automatic stay on debt collectors and allows you to discharge your eligible unsecured debts without sacrificing your most valuable possessions, such as your home and vehicle, by continuing to make payments for those assets. There are several reasons why bankruptcy may be a good New Year’s resolution for you:

  1. Getting a Fresh Start: It is difficult to improve your financial health when you have debts that will not go away. Your available income may be unable to keep up with your scheduled debt payments, causing your debt to grow worse. Completing bankruptcy gives you a fresh start that is free from the pressure of creditors. From there, it is easier to figure out how to budget your finances and find ways to save money.
  2. Timing with Taxes: You can use bankruptcy to pay off or discharge income tax debt that you owe to the IRS or state, but there are some conditions to discharging tax debts in bankruptcy. One of those conditions is that the income tax debt must be at least three years old to be eligible for discharge. Income taxes are due after the start of the new year, which means that some of your tax debt may be newly eligible for discharge as long as your recent tax returns have been filed on time.
  3. No Reason to Wait: People make New Year’s resolutions because it is a time when they assess their lives and identify things they want to change about themselves. Since we are entering 2020, you will be looking even further back at the past decade. You may have been considering bankruptcy for a while but have put off making a decision. If you need to file for bankruptcy, there is no reason to delay the process. Your debt problems are unlikely to solve themselves and may get worse instead. The sooner you file for bankruptcy, the sooner you can find relief.

Contact a Denton County Bankruptcy Attorney

The idea of filing for bankruptcy can be nerve-wracking, but remember that you are not going through the process alone. A Frisco, Texas, bankruptcy lawyer at The Page Law Firm will lead you every step of the way and show you how bankruptcy can help you. Schedule a free consultation today by calling 214-618-2101.

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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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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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