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Recent Blog Posts
Bankruptcy and Debt Solutions: How Can I Find a Reputable Credit Counselor?
Whether you are planning on filing for bankruptcy or simply need assistance in developing a budget, credit counselors can provide you with the tools and resources you need. Unfortunately, not all credit counselors are created equal. In fact, some can leave you worse off than when you started, which makes finding an experienced, reputable credit counselor absolutely essential for your financial future. The following tips can help you find the one most suited for your needs and preferences and improve your chances of finding the financial empowerment you are looking for.
Know Why You Need a Credit Counselor
Each credit counseling agency and provider has an area in which they are best equipped to help their clients. With this in mind, it is critical that you first know why you need credit counseling. To find the answer, consider your goals and examine your current financial situation. If you are filing for bankruptcy, then you will also want to ensure you find a credit counselor that is approved by the United States Department of Justice since those who are not accredited will not be accepted by the courts.
Chapter 7 Timing to Discharge Student Loans
Discharging a student loan requires showing undue hardship. The timing of your Chapter 7 filing can determine whether you succeed in this.
We’re in a series on the smart timing of your bankruptcy case. Last week we introduced the special condition you must meet to discharge (write off) student loans: “undue hardship.”
Bankruptcy discharges other special forms of debt—such as income taxes—after the passage of a certain amount of time. But student loans are different in that there is no explicit time period laid out in bankruptcy law. Rather “undue hardship,” the condition you must meet to discharge a student loan, often has timing considerations within it. That is, qualifying for “undue hardship” may require timing your bankruptcy case right. You may not be in “undue hardship” at one point but could be earlier or later.
Today we show that can play out under Chapter 7 “straight bankruptcy.”(Next week we’ll do the same under Chapter 13 “adjustment of debts.”)
Bankruptcy Timing to Discharge Student Loans
Discharging—permanently writing off—student loans can be difficult. You may be able to make it easier to do with good bankruptcy timing.
Discharging Student Loans in Bankruptcy
It takes certain circumstances to discharge student loans. Those circumstances can involve the right timing of your bankruptcy case.
Bankruptcy discharges most debts. But it “does not discharge” you from a student loan unless not discharging that debt “would impose an undue hardship.” “[I]mpose an undue hardship” on whom? “[O]n the debtor [you] and the debtor’s dependents.” Section 523(a)(8) of the U.S. Bankruptcy Code.
What does that mean and how is it affected by the timing of your bankruptcy case?
“Impose an Undue Hardship”?
How Should I Handle Creditor Harassment After a Bankruptcy Filing?
When you file for bankruptcy, you are granted an automatic stay on most of your debts. Essentially, this means your creditors cannot contact you or attempt to collect the debt. What happens, though, if the creditor keeps calling and harassing you through the mail, at your work, or at your home? Rest assured: you can enforce the protections that bankruptcy offers.
When Contact Is a Genuine Oversight
All creditors know (or should know) that a bankruptcy filing means they must cease all contact with you, as the debtor. As such, most who violate this rule have simply done so due to an oversight. Perhaps they did not remove your name from the system properly, or they have not received the paperwork yet that notifies them of your filing. In any case, it is important that you not overreact or panic during the initial contact from a creditor. Instead, simply inform them that you have filed for bankruptcy and politely refer them to your attorney.
Prevent Fraud Challenges on a Credit Card Debt
Very recent credit card purchases and cash advances can be a problem when filing bankruptcy. Smart timing can mostly solve this problem.
Last week’s blog post introduced the so-called “presumptions of fraud” in bankruptcy. Today we get into dealing with this issue through smart bankruptcy timing.
Bankruptcy Timing to Avoid the Presumption of Fraud
Here’s the key point: you greatly increase the risk that you’ll still have to pay a credit card debt if you file bankruptcy too soon after incurring that debt. You risk still having to pay the purchase(s) and/or cash advance(s) recently incurred. You may still have to pay that part of that credit card debt in spite of bankruptcy.
But you can avoid much of that risk by timing your bankruptcy right. The presumptions of fraud are in effect for only a relatively short period of time after you make the purchase or cash advance. You avoid the presumption of fraud simply by filing bankruptcy after that short period of time has passed.
Smart Timing with the Presumptions of Fraud
You can avoid the presumptions of fraud, and so discharge more of your credit card debts, by timing your bankruptcy filing right.
This blog post continues a series about the smart timing of your bankruptcy filing started back in July. (It’s been interrupted by urgent blog posts related to the pandemic—about unemployment benefits and the federal eviction moratorium.) The last in this timing series was about how bankruptcy timing helps with income tax liens.
Important Examples of Good (and Bad) Timing
Since it’s been so long since we introduced this, here is a list of some of the main consequences of good and bad bankruptcy timing. Whether:
- the bankruptcy case includes recent or ongoing debts or not
- you have to pay an income tax in full, in part, or not at all
- you must pay interest and or penalties on an income tax because of a tax lien
- you can discharge (legally write off) a credit card debt, or a portion of it
Common Myths About Bankruptcy in Texas
At our firm, we help clients every day with questions and concerns about the bankruptcy process under the U.S. Bankruptcy Code. Our experience has shown us that bankruptcy proceedings are often misunderstood, and unfortunately, misinformation abounds among those considering filing for bankruptcy. If you are thinking about bankruptcy as an option for your situation, it is very important for you to fully understand the potential advantages and disadvantages, as well as what might happen after the proceedings are complete. With this in mind, here are three of the most common myths about bankruptcy, along with the truth about each one.
Myth # 1: My Employer Will Be Notified That I Filed for Bankruptcy
Financial struggles are embarrassing for many people, and the reasons are understandable. As a result, it might be humiliating for you if your employer were to be notified of your bankruptcy filing. The good news is that this myth—albeit common—is just that: a myth. The bankruptcy process does not involve any employer notification whatsoever unless you happen to owe a formal debt to your employer somehow—in which case your employer would be notified, but as a creditor. Bankruptcy filings are public record, which means they could technically be published by the press, but it is unlikely that your employer would have much interest in searching through such publications.
Federal Eviction Moratorium Update
The current federal eviction moratorium comes with a number of qualifications and conditions. Be aware of them. It’s a limited but helpful tool.
Our last three weekly blog posts have been about the new Agency Order temporarily stopping many residential evictions. This Order by the Centers for Disease Control and Prevention (“CDC”) went into effect on September 4, 2020. It expires on December 31, 2020, when all unpaid rent will be due and evictions can resume.
Three weeks ago we described this eviction moratorium. Two weeks ago we discussed how renters could get more benefit from the moratorium with a Chapter 7 “straight bankruptcy.” Last week we got into how Chapter 13 could help significantly more. This week we provide additional important practical information.
Chapter 13 and the Eviction Moratorium
Use Chapter 13 to catch up on back rent that piles up during the eviction moratorium, so that you can stay in your rental long term.
Our blog post two weeks ago was about a recent federal order temporarily stopping certain residential evictions throughout the country. Check out that blog post to see who is covered and how to take advantage of this eviction moratorium.
Asserting Your Right Not to Be Evicted
Assuming you qualify, you must act to assert your right not to be evicted. This mostly means you need to print up, review, sign, and give your landlord a two-page declaration form. Here is that Declaration form.
Does the Automatic Stay During Bankruptcy Apply to Child Support?
When you file for protection under the U.S. Bankruptcy Code, the bankruptcy court will automatically issue a stay that stops all collection activities by creditors. The automatic stay is a court order that prevents creditors from calling you, sending you letters, and otherwise pushing you to pay what you owe them. The stay is meant to be a form of relief that gives you the chance to get organized as you approach your bankruptcy proceedings. If you are subject to a child support order, however, it is important to understand that the automatic stay will not help you with that particular obligation.
How the Automatic Stay Works
Whether you are filing Chapter 7 or Chapter 13 bankruptcy, the bankruptcy code recognizes that you will need time and space to sort out your thoughts and to prepare for the proceedings without creditors bothering you at all hours of the day. The automatic stay is meant to give you that time and space. The stay also serves as the proverbial “line in the sand” as well, meaning that once the stay is issued, collection efforts cannot resume until the bankruptcy proceedings are complete or the creditor obtains the express permission of the bankruptcy court to contact you again. In the meantime, you will not be at risk of foreclosure, eviction, wage garnishments, or even having your utilities shut off.
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