Category: Bankruptcy

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If you are burdened with immense debt, then bankruptcy is a way out. People, on one hand, are happy to get back on financial track yet simultaneously, they are also scared of the ill effects of bankruptcy. However, bankruptcy might not be the best way to resolve your problems. Before you file for bankruptcy, Dallas based bankruptcy law firm Recovery Law Group says you should ask the following questions:

• Which bankruptcy chapter is ideal for me?

Individuals can file for bankruptcy under chapter 7 or chapter 13. In the case of former, non-exempt property is liquidated by the bankruptcy trustee and the proceeds are used to pay off the creditors. Almost all unsecured debts like medical and credit card bills are discharged in this case, but secured debts like mortgage and car loan survive a bankruptcy discharge. You can use federal or state exemptions like homestead exemption etc. to protect your assets like home during bankruptcy. However, to qualify for this chapter, you need to have a household income below the state median, or you will be required to pass the means test. In the case of chapter 13, the reorganization of debts takes place and the debtor pays off the creditors through a court-approved repayment plan based on their disposable income. Generally, this plan is for people who have income more than the average individual in the state and wish to protect their non-exempt property.

• What debts are forgiven in bankruptcy?

If you think that bankruptcy will get rid of all your debts, you are sadly mistaken. Those debts that are not forgiven in bankruptcy include secured debts like mortgage and automobile loans. Additionally, priority debts like tax debts, alimony and child support, student loan, etc. are also not erased in either bankruptcy chapters. For more knowledge of debts that can or cannot be discharged in bankruptcy, you can ask experienced bankruptcy lawyers at 888-297-6023.

• What happens to assets belonging to pension and retirement funds?

Pension plans, life insurance policies as well as retirement accounts like 401(k), IRAs, etc. are protected from becoming part of your bankruptcy estate thanks to state or federal bankruptcy exemptions. However, some retirement plans might not be exempted from bankruptcy.

• Can your debt consignor be affected by your bankruptcy?

When you opt for bankruptcy, any person who has cosigned your debt will be held responsible for the payments on your agreement. Though chapter 13 generally protects co-signers of the debt, chapter 7 does not offer any such protection.

Individuals who are struggling with a huge amount of debts can file for individual bankruptcy irrespective of their marital status (single, married or undergoing divorce) say lawyers of Dallas based bankruptcy law firm Recovery Law Group. Additionally, debtors can also file individual or joint bankruptcy during the marriage or ongoing divorce.

As a rule, when a married person files for bankruptcy, they can file either individually or jointly. When they file jointly, the joint income of spouses is taken under consideration to determine whether they can file for Chapter 7, 13 or 11 bankruptcy. Household income is an important criterion for bankruptcy chapter eligibility. Even though just one of the spouses is filing for bankruptcy, the income of the other is also taken into consideration and therefore must be declared to the court and bankruptcy trustee.

In the case of a married couple that is on the verge of separation and living apart, filing for bankruptcy of one might be a problematic issue. When filing as an individual, they might be able to qualify for chapter 7 bankruptcy, but not when their spouse’s income is included in the household income. If a married couple is living separately, it means they are dealing with double expenses.

Some states offer marital adjustment in bankruptcy. this allows the individual who is filing for bankruptcy to deduct expenses belonging solely to the non-filing spouse from the latter’s income. Thus, from the couple’s total income, any expense exclusively owned by the non-filing spouse needs to be deducted. In this way, the bankruptcy filing spouse won’t be fined for expenses that are not for their benefit. Bankruptcy lawyers can guide you better on this aspect. You can consult with them at 888-297-6023.

Bankruptcy is an excellent way to get rid of your debt. However, lawyers of Los Angeles based bankruptcy law firm Recovery Law Group say that people are often worried about how this might affect their credit report. The Fair Credit Reporting Act (FCRA) dictates how creditors, credit buyers as well as credit reporting agencies report the credit. This act was drafted and implemented to ensure that the actual representation of credit information was done by creditors. they are expected to inform consumer reporting agencies accurately with respect to the status of the debts of an individual. Additionally, FCRA directs credit reporting agencies which information can be reported and for how long that information will stay on the credit report. moreover, if the creditor does not display the information correctly, the debtor can approach the FCRA for the violations.

How are discharged debts reported on credit reports?

FCRA does not instruct credit reporting agencies on reporting discharged debts as there are no strict laws on such listings. The act, however, does mention that reporting agencies should not misrepresent the information. The creditors are also required to update any inaccurate reporting after they are notified by the debtor. If the creditor refuses to report a discharged debt to the reporting agency in order to get money from the debtor, they are in violation of the discharge injunction of bankruptcy.

Bankruptcy is listed on credit report for 7 years in the case of chapter 13 discharge and for 10 years in case of chapter 7 discharge. Having bankruptcy on your credit report lowers your credit score but at the same time, it also gets rid of your bad debts which were affecting your credit rating. You can slowly and with continuous efforts improve your credit score after bankruptcy. Any debt that is discharged in bankruptcy cannot be reported by the credit reporting agency as:

• Charged off
• Delinquent or late
• Active or currently owed
• Having due balance
• Converted to a new debt (with different account number)

Misrepresentation of discharged debts in this manner can affect the debtor’s credit report. This can result in failure to obtain fresh credit or paying off a debt that was discharged in bankruptcy. Thus, credit reports need to accurately represent the status of the debts.

Make sure your debts are accurately presented on the credit report

Once you get your bankruptcy discharge, get an updated credit report within 60 days of discharge. It is better if you get one from all three major credit-reporting agencies (Equifax, Experian, and TransUnion). You need to carefully go through each for every debt and creditor name for any discrepancy. Any unfamiliar debt or creditor might be for a discharged debt that was bought and sold to a 3rd party. Since the debts were discharged through bankruptcy, they need to be listed so in your credit report. any misrepresentation of facts must be reported to the agency and disputed through the FCRA dispute procedure.

In case you are having a tough time figuring out the details, you can speak with experienced bankruptcy lawyers at 888-297-6023.

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When you are drowning in debts and are on the brink of losing your home to foreclosure, then bankruptcy might be the best way to not only save your home but also get rid of your debts say Dallas based bankruptcy law firm Recovery Law Group lawyers.

People often take a mortgage for buying a house; however, there may be circumstances when people are unable to keep up with mortgage payments. When homeowners are unable to pay their mortgage for a long time, the mortgage lender might initiate legal proceedings against the homeowner in the court by obtaining Judgement of Foreclosure. With this judgment, the lender can initiate proceedings for the public selling of your home.

Generally, the foreclosure process is not initiated unless you have missed several payments on your mortgage. In the meanwhile, you can try various other alternative methods to avoid foreclosure like a loan modification, short selling the house, loan forbearance plan, or get a deed in lieu of foreclosure. If these techniques do not work, then you can opt for bankruptcy.

For bankruptcy filers who wish to get rid of their mortgage debt, chapter 7 is the best option. In this case, liquidation of assets takes place to get rid of your debts. To be able to qualify for this bankruptcy chapter, your income must be lower than the state median. However, if you wish to save your home or if your income is higher (making you ineligible for chapter 7 bankruptcy), you can opt for chapter 13 bankruptcy. Through this chapter, you can even catch up on past mortgage payments and bring them up to current. The plan lasts for 3-5 years and has the option for mortgage mediation where your monthly mortgage payments could be lowered.

Automatic stay

Filing of bankruptcy (chapter 7 or chapter 13) results in automatic stay! This order results in stopping all collection actions by creditors including foreclosure. In fact, the automatic stay can even postpone home sale if bankruptcy is pending (for 4 months or longer). However, if the lender files a Motion for Relief from Stay and wins it, then postponing of sale can be canceled. With this motion, the lender has the court’s permission to go ahead with debt collection. Good news for debtors is that despite this motion, the court can still postpone house sales, albeit for a short time only.

In case you are bogged down by debt and are considering bankruptcy

filing, you need to be aware of the extent of homestead exemption available in your state. You can ask experienced bankruptcy lawyers at 888-297-6023 about which properties and of how much equity can they protect with the provided exemptions.

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People, filing for bankruptcy, are always concerned about whether they will and when they will be able to utilize their credit again. To be able to use the credit again depends on each person’s situation. However, one undisputed determining factor for it is the amount of time that has passed.

After Filing for Chapter 7 Bankruptcy

Getting credit after a Chapter 7 bankruptcy is difficult, but not impossible. People with poor credit or no credit will find it difficult to get credit with favorable terms, as they will be asked to pay more to be able to borrow money. This means the rates of interest and annual fees will increase for them. However, after Chapter 7 bankruptcy, your debt to income ratio will considerably decrease and you won’t be eligible to file for Chapter 7 bankruptcy again for the next 8 years. Both of these factors will help you in becoming a more likable borrower for your creditors.

After Filing for Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you won’t have to wait for 3 to 5 years to try to use your credit, despite it lasting for around 3 to 5 years. Although there will be a decrease in the debt to income ratio of Chapter 13 filers, it won’t be as fast as it is in Chapter 7 bankruptcy. In most of the instances, the rest of the Chapter 13 bankruptcy can be financed by the filers, after around 18 months. Having equity in your home is one such instance where this is particularly possible.

Few Things to be Consider

It is always better for you to take time and improve your financial future than to immediately jump at the offer of borrowing money from a willing lender. You should save money and rebuild your credit score to get credit with more favorable terms. One of the best ways to improve your credit score is to get a credit card, which is an unsecured debt, and to keep up with the repayment of the balance every month. As soon as your credit score reaches around 620, you can start looking for the best loan terms and rates.

Your credit score, before the filing of bankruptcy, will largely determine the time duration taken to get back to a good credit score rating. The after-effects of bankruptcy on your credit score will depend on your previous low credit score and the time passed since you received a bankruptcy discharge. In Chapter 7 bankruptcy, your credit rating is affected for about 10 years and in Chapter 13, it is affected for about 7 years.

If you are finding it hard to cope with the pressure of your debts and are deciding to file for bankruptcy, contact The Recovery Law Group, the best bankruptcy attorneys in Los Angeles & Dallas, TX, at Recovery Law Group and 888-297-6203. Bankruptcy is a hard decision to make and the guidance of experienced bankruptcy lawyers will help you in getting through this complex process. Bankruptcy is not only about your today but also about your yesterday and tomorrow.

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In Florida, the practice of lien stripping is permissible in bankruptcy. In lien stripping, you can remove the entirely unsecured liens from your homestead property. In bankruptcy, entirely unsecured liens are known as ‘wholly unsecured liens’. A wholly unsecured lien is that lien on the filer’s property which does not receive any money from a foreclosure sale, as there will not be any money left after the payment made to the first lien holder. This means that if your first mortgage debt is more than your property’s worth, and you also have other mortgage debts, those other mortgages will be wholly unsecured debts. The date of recording of each of your mortgage, in the public record, will decide your first mortgage holder.

If you will request the court to strip your wholly unsecured mortgage in a Chapter 13 filing, the wholly unsecured mortgage will become an unsecured debt. Unsecured debts are those which are not secured by any asset like a home or a car. Such debts include medical bills, credit cards, utility bills, etc. Your Chapter 13 repayment plan will provide little or no money to your stripped liens and other unsecured debts. As soon as you will receive your Chapter 13 bankruptcy discharge, your stripped lien will be discharged. The lienholder will have to remove his lien from your homestead property.

Unfortunately, the Supreme Court of the United States has ruled out the availability of lien stripping in a Chapter 7 bankruptcy filing.

To learn more about lien stripping of an entirely unsecured mortgage and home equity line of credit in bankruptcy, consult the experienced and competent bankruptcy lawyers of Los Angeles & Dallas, TX, today. You can reach the Recovery Law Group at Recovery Law Group or call on 888-297-6203. They will help you decide whether bankruptcy is the right option for you or not.

Call: 888-297-6203

Jointly-owned property with siblings, spouse or any other person, concerns most of the filers of bankruptcy. The possibility, of joint-owners losing the interest in the property, is a matter of real concern. The exact effect of a bankruptcy filing, in such matters, depends on the relationship between the joint owners, the process of titling of the property, and the filer’s state exemptions.

The most common joint-owners are spouses. In Florida, property jointly-held by spouses is supposedly by Tenancy by the Entirety, if not specifically mentioned otherwise. This kind of joint-ownership has its own perks as the property in question will be protected from the bankruptcy estate, in case, both the spouses are not filing for bankruptcy, and there are also no unsecured joint debts. However, property jointly-held with the survivorship right does not afford this kind of protection.

Another most common joint-ownership is between siblings. Siblings might jointly-own property inherited from a dead parent or other family members. If that property is not under the protection of the bankruptcy exemption, your sibling or another member of the family faces the possibility of losing their interest in the property because of the bankruptcy filing. Unfortunately, the process of you acquiring the property does not entice the bankruptcy court. Once you have acquired a property, it automatically gets included in your bankruptcy estate, irrespective of whether you purchased it, inherited it or received it as a gift. Thus, if that property is not safeguarded by your state exemption, it can be sold to settle your debts on the request of your bankruptcy trustee, and your co-owner will lose the right on that property. This is applicable in the case of tenants in general, joint tenants, and joints tenants with the survivorship right.

Consulting a competent bankruptcy lawyer will help you in making the right choice of whether to file for bankruptcy or not. To learn more about jointly-owned properties in bankruptcy, reach The Recovery Law Group at Recovery Law Group or call on 888-297-6203. It is one of the best law firms in Los Angeles & Dallas, TX.

Call: 888-297-6203

Most people live their lives on loan. They are accustomed to using their credit cards for everything they buy. However, many times, being unable to pay off the amount due, they end up in debt. When the debt piles up, you might have to face severe consequences like threatening phone calls and even wage garnishment. The latter is a court order through which the creditor will receive money from your paycheque. Your employer is compelled to deduct the specified amount and pay the creditor. This continues till the due is cleared. However, Dallas based bankruptcy law firm Recovery Law Group says that there are limits to how much money can be garnished from the paycheque.

How does wage garnishment work?

For a creditor to garnish wages from your paycheque, they need judgment from the court. After obtaining the judgment order, the creditor needs to file a Motion for Continuing Writ of Wage Garnishment in the court. This will result in them obtaining the Continuing Writ of Garnishment Against Salary that is provided to your employer. On receiving the writ, the employer gets 20 days to respond to the court affirming whether they are your employer or not. Additionally, they also need to inform the frequency of your pay period and the amount of your wages. The writ tells the employer how much money would be withheld from your wages and where that money needs to be sent. Most debts require a wage garnishment order from the court, except when the debt is related to student loans, income tax or child support.

How can you stop wage garnishment?

Every state has different rules related to bankruptcy. The household exemption can be used to stop wage garnishment if you give more than half of child or dependent support. If this option is not available to you, then bankruptcy is the way out to prevent wage garnishment. Filing for bankruptcy results in the automatic stay which stops all collection actions including wage garnishment, except in case of certain debts like back-owed child support. The automatic stay continues to be in place till you get a bankruptcy discharge, or the case is dismissed. The automatic stay can also be removed if the creditor gets court permission for continuing wage garnishment. If you get a discharge and the debt for which wages were being garnished is discharged, then you will no longer have to face wage garnishment.

If you are facing something similar and don’t know a way out, you should consult with bankruptcy lawyers immediately. Call 888-297-6023 and experienced bankruptcy lawyers will provide you with the essential help required to save your wages from being garnished by creditors.