The Fealy Law Firm, PC The Fealy Law Firm, PC2024-01-26T11:24:19Zhttps://www.houston-bankruptcy-attorney.com/feed/atom/WordPress/wp-content/uploads/sites/1303035/2022/10/cropped-fav-32x32.pngOn Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2514132024-01-23T11:25:03Z2024-01-26T11:24:19ZChapter 7 bankruptcy basics
Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," involves the sale of non-exempt assets to settle debts. This process helps provide a fresh start for individuals overwhelmed by financial burdens.
The protection of retirement accounts
Retirement accounts are a lifeline for many individuals. They represent years of hard work and disciplined savings. The good news is that, in many cases, these accounts are not part of liquidation during Chapter 7 bankruptcy proceedings.
Qualified retirement accounts
Qualified retirement accounts, such as 401(k)s and IRAs, are typically safeguarded. These accounts enjoy protection up to a certain limit. This ensures that you can maintain a financial cushion for your post-working years.
Non-qualified retirement accounts
Non-qualified retirement accounts, while not enjoying the same level of protection as their qualified counterparts, may still have exemptions. The extent to which these accounts have protection depends on state laws and individual circumstances.
Careful consideration required
While the protection of retirement accounts is reassuring, it is important to approach Chapter 7 bankruptcy with careful consideration. Understanding the nuances of exemptions and limitations is necessary for making informed decisions about your financial future.
While filing for bankruptcy comes with questions and a range of emotions, it offered 225,455 people financial relief in 2022. Although it has an immediate and short-term financial impact, individuals filing for Chapter 7 bankruptcy often find comfort in the protection afforded to their retirement accounts.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513882023-11-03T05:20:13Z2023-11-08T06:19:22Z1. Unmanageable debt
When your debt load becomes unmanageable, it can be challenging to make regular payments. If you find yourself struggling to meet monthly obligations like rent, utilities or minimum credit card payments, it is a clear indicator that your financial situation might require a reset.
2. Creditor harassment
Constant phone calls and letters from creditors can take a toll on your emotional and mental well-being. If experiencing relentless harassment from creditors demanding payment, it might be time to explore bankruptcy as a way to put an end to these aggressive tactics.
3. Legal actions
When dealing with legal actions, such as wage garnishment or lawsuits stemming from unpaid debts, turning to bankruptcy can offer legal safeguards. Initiating bankruptcy proceedings can put a stop to these actions and potentially lead to the discharge of your debts, providing you with a chance to begin anew financially.
4. Zero progress in reducing debt
If, despite your best efforts, you see no improvement in your overall debt situation, it may be time to consider bankruptcy. This is especially true if you only make minimum payments on credit cards, which can lead to a cycle of increasing debt due to high interest rates.
While having to file for bankruptcy may come with negative emotions, it is a solution for many people to get their finances back on track. In 2022 alone, the U.S. courts handled 374,240 non-business bankruptcy filings.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513862023-07-31T05:57:34Z2023-08-03T05:57:19ZA cataclysmic impact on businesses
Small businesses are organizations with less than 100 staff members. They accounted for 98 percent of all companies forced to close due to a worldwide pandemic based on data from the US Small Business Administration.
Regardless of the struggle businesses face on a daily basis, many times, bankruptcies are a business owner’s only option to get out from under.
Difficult choices
The type of bankruptcy a business owner selects comes from various factors ranging from the specific entity to the liability for debts. Also, owners have to decide to keep operations open and strategies moving forward to ensure stability and hopeful success.
Options include:
Chapter 7 – An option ends the business as assets are liquidated. Business owners surrender nonexempt property that the trustee will sell. Subsequently, the proceeds go to creditors. Certain exemptions involve home equity, vehicles, furniture, and clothing. Benefits include no means test, no liability for business debts, and a shorter process lasting up to six months.
Chapter 13 – Similar to consumer bankruptcy, businesses that maintain revenue can request a repayment plan spanning three to five years. Once completed and provided that filers are current with debts, the remainder is discharged and continue operations without court oversight.
The dream of starting and operating your own business is a dream come true for many entrepreneurs. However, when challenges arise, falling revenues can become a nightmare, often requiring the help of an experienced bankruptcy attorney.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513852023-04-21T13:04:26Z2023-04-26T13:02:57ZDebts bankruptcy does not discharge
Bankruptcy proceedings, regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, do not discharge certain types of debts. For example, bankruptcy does not discharge student loans in most cases. However, if you can prove that repaying your student loans would cause you undue hardship, you may be eligible for a discharge. To do this, you must demonstrate that you have made a good-faith effort to repay the loans and that your financial situation is unlikely to improve in the future.
Furthermore, bankruptcy generally does not discharge some tax debts, such as recent income tax debts, payroll taxes and tax penalties. In certain circumstances, bankruptcy may discharge older income tax debts if you meet some specific requirements, such as the debt being at least three years old and the tax return filed at least two years before filing for bankruptcy.
Evaluating the impact of non-dischargeable debts
Before deciding to file for bankruptcy, consider the impact of non-dischargeable debts on your overall financial situation. If non-dischargeable debts make up the majority of your debt, bankruptcy may not provide the financial relief you need.
Conversely, if you carry a significant amount of dischargeable debt, such as credit card debt or medical bills, bankruptcy could help you eliminate those debts and focus on repaying non-dischargeable obligations.
While bankruptcy can help eliminate many types of debt, understanding that bankruptcy cannot discharge some debts is essential. Proactively addressing your financial challenges can help you regain control of your finances and work towards a more stable financial future.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513842023-01-23T16:57:54Z2023-01-26T20:22:48ZThe Federal Trade Commission
The Federal Trade Commission has a rule in place that creditors cannot exhibit abusive behavior in the process of trying to collect a debt. If a creditor is harassing you, filing a complaint with the FTC is a wise first step to take. In addition to harassment, debt collectors are also forbidden from lying in order to intimidate a debtor.
The Consumer Financial Protection Bureau
This agency takes complaints from customers who have complaints about a business, including those wishing to report their lender, bank or similar corporation.
The attorney general
In Texas, the Attorney General's office has a helpline that accepts calls regarding harassing actions taken by a debt collector. State Attorney General's offices also tend to have further resources for people wanting to learn more about the debt collection process.
Knowing where to turn is prudent for those experiencing a tough time. In the instance of debt collector harassment, there are at least three places where people can generally turn for assistance.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513452022-11-22T18:47:25Z2022-11-08T18:24:03ZUnited States Courts, 335,886 people filed for Chapter 7 in 2021. If you believe Chapter 7 is the right choice, avoid the mistakes described below.
Do not transfer assets
You cannot change the title on your assets before filing for bankruptcy. Doing so puts you in danger of bankruptcy fraud. Before you file, do not change the title on your car, bank accounts, home or business venture. Chapter 7 does not necessarily mean you will lose all your assets, and committing fraud will not help your situation.
Do not use credit cards
Stop using your credit cards before filing for Chapter 7. If you can, use debit cards and cash only. Creditors might object to a debt discharge if they notice you bought a new watch before filing. You can use a credit card to purchase essential items.
Do not make preferential payments
If you can continue paying regular bills, you should do so. However, you should not pay preferential treatment to specific debtors. Even if you have good intentions, bankruptcy laws prohibit preferential transfers. A lender might sue you for the money back if they discover you paid someone else off before the lender received a payment.
Filing for bankruptcy is a stressful prospect. Once you make that decision, do not make things worse by committing the abovementioned mistakes. Stay on top of your credit usage, and let the courts handle the rest.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2513442022-11-22T18:47:17Z2022-11-08T18:24:00Zrebuild after bankruptcy.
Get a secured credit card
With a history of bankruptcy, you become a risk to credit card companies. They do not want to issue a line of credit to people with poor credit scores or a history of non-payment. A secured credit card is an option because it requires a cash deposit from you. Your borrow limit is typically the amount you deposited. This is less risky for the credit company because if you do not pay, they keep your deposit.
Make consistent payments
To help improve your credit score, show that you are a responsible borrower by consistently making payments on time. In addition to making consistent payments for any credit cards or loans you have, also make consistent payments to utility companies.
Rehab your finances
As debts get discharged or paid off during bankruptcy, you get an opportunity to start over financially. Start a savings account and build an emergency fund by depositing a portion of each paycheck. Having this money set aside can help you avoid falling back into debt. Creating and sticking to a budget can help prevent future debt as well.
As you rebuild your credit, be sure to check your credit score monthly. By doing so, you can verify that the debts discharged by bankruptcy get removed accurately. Regularly monitoring your score will also help you catch anything like fraud or identity theft that could negatively affect your score.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2507102022-03-03T19:49:08Z2022-03-09T19:48:37ZWill I lose any of my property in a Chapter 13 filing?
The liquidation of personal assets is not typically a requirement in a Chapter 13 filing. Rather than needing to cash out the equity in your home or sell off your valuable possessions to repay creditors, you have to create a repayment plan. Chapter 13 bankruptcy is a great solution for people with a lot of debt but also a lot of property that would be at risk in a Chapter 7 filing.
How does the repayment plan work?
When you first file for bankruptcy, you will provide the courts with financial information, including information about your creditors. The court assigned a trustee to oversee your bankruptcy, and that trustee will arrange a creditor meeting.
At that meeting, representatives of the creditors of the trustee will ask questions of the person filing and negotiate a repayment plan that involves monthly payments to all of their unsecured creditors. This plan will usually require that someone use almost all of their disposable income for payments.
The person filing will make payments to the trustee, who distributes the funds to the creditors, for at least three years, sometimes longer. At the end of those payments, the courts will discharge the remaining balances on those unsecured accounts.
How long will Chapter 13 bankruptcy affect your credit?
Given that it takes longer to secure a discharge and that the person filing has made a concerted effort to repay their debts in a Chapter 13 filing, their discharge will stay on their credit report for less time than it would if they filed a Chapter 7 bankruptcy. The record of your bankruptcy will come off of your credit report after seven years, just like with any other debt or blemish.
Filing for Chapter 13 bankruptcy can be a viable solution for individuals with higher-than-average income or significant personal property.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2507062021-12-10T12:57:13Z2021-12-15T12:55:09ZPromising statistics
The third quarter of 2021 saw new foreclosures increasing by nearly a third from the second quarter. When looking at the same time last year, that number represents a 67 percent increase. Nationally, Texas ranks second with 2,827. Even with that surge, lenders continued to pursue what is termed “aggressive modifications,” a strategy that should keep foreclosure numbers relatively low and allow people to remain in their homes.
Forbearance programs delayed monthly payments for 18 months, with those installments switched to the end of the loan period or repaid following a refinancing or sale. Those options helped drop foreclosures to nearly 4,000 per month during the first year of the pandemic, an amount much lower than the average of 40,000.
However, these government and private sector initiatives are starting to expire. Those in the business of borrowing money are now shedding the programs, with the most significant reduction coming last month. Week to week, the bailouts decreased 11 percent.
Options for those still struggling
Active plans dropped by 177,000, with 84,000 coming from FHA/VA loans. Last month saw 1.4 million homeowners in programs brought on by the worldwide pandemic, accounting for almost three percent of all active mortgages. Most emerge current on payments. Others are throwing in the towel, selling their dwellings, or allowing their homes to go into foreclosure.
Another option for homeowners is Chapter 13 bankruptcy protection to hold off foreclosure and remain in the home, even if multiple payments are past due. While Chapter 7 discharges debts, it doesn’t stop the foreclosure process. However, wiping out credit card debt and other financial burdens can free up money that can go towards mortgage payments.
There is some good news for struggling homeowners. Home equity is reaching higher and higher levels thanks to a housing boom that saw an 18 percent increase in real estate prices in August, the exact opposite of another crisis, the Great Recession of 2008.]]>On Behalf of The Fealy Law Firm, PChttps://www.houston-bankruptcy-attorney.com/?p=2506872021-10-05T21:18:31Z2021-10-05T18:49:51ZYou will permanently destroy your credit
There is no question that filing for bankruptcy will drag down your credit score. You may see your score drop by as much as 200 points immediately after you file. However, having one blemish on your credit report from bankruptcy will do less damage to your credit score than multiple past-due lines of credit and judgments. You will be surprised to see how quickly your credit begins to recover after your discharge since you are eliminating debt.
Additionally, even the record of your bankruptcy discharge will eventually come off of your credit report. You can expect all formal records of your bankruptcy to go away 10 years after your Chapter 7 discharge or seven years after your Chapter 13 discharge.
You will lose all of your property or your home
Not every bankruptcy requires property liquidation. Those who file for Chapter 13 bankruptcy won’t have to give up any of their assets at all.
Even those who file for Chapter 7 bankruptcy can exempt some of their property from the liquidation requirements. You may be able to protect the equity in your home, furniture, a vehicle or retirement savings in a Chapter 7 bankruptcy filing.
You will face serious social stigma over a bankruptcy
While it is true that employers will review your credit report for blemishes before hiring or promoting you, not every company does so. Although there may be some limitations on your options for renting a place to live or obtaining the best jobs out there right after you file, those limitations will go away when your bankruptcy comes off of your credit report.
Most people will never even know that you filed for bankruptcy unless you notify them of that directly. In other words, you don’t have to worry about social stigma because the average person will have no idea that you ever required the protection of bankruptcy.
Learning the basics of bankruptcy can help you feel empowered to take control of your finances.
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