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Austin Bankruptcy Law Blog

The categories of bankruptcy

Personal bankruptcy in Texas can be a tedious, stressful and even an embarrassing experience, but there are ways to handle financial situations while maintaining the right to personal property. There are a number of options one can choose from when facing the repercussions of bankruptcy.

The Texas Bankruptcy Law identifies the strategies one can apply to personal bankruptcy situations. The Law states that under a Chapter 13 bankruptcy, a debtor proposes a 3-5 year repayment plan to creditors offering to pay off all or part of the debts from the debtor's future income. Individuals may use Chapter 13 to prevent foreclosure on homes and stop interest from accruing on tax debt, among other financial tensions. Those who choose a repayment plan must follow the terms of agreement in order to purge remaining dischargeable debt at the end of the plan. To file Chapter 13 bankruptcy, an individual must have a steady source of income.

Keep your property, but get rid of your debt

There are many misconceptions and fears regarding the bankruptcy process. One of the main things that hold people back is the fear that they will lose all of their personal property as a result of seeking relief from their crushing debt. In reality, there are certain exemptions that apply in Chapter 7 bankruptcy cases, and Texas applicants may be able to keep more than they thought possible. 

Your personal property is important to you, and you may be rightfully concerned about what will happen to your stuff. You do not have to let these fears hold you back; rather you may seek a better financial future while still keeping most of your property.

What is debt settlement?

When you are overwhelmed with debt in Texas, it sometimes feels like your finances are irreparably damaged. However, there are many ways you can repair your financial situation. A previous blog discussed some of the paths to eliminating debt. Today’s blog will focus on helping you understand debt settlement.

The Federal Trade Commission says that debt settlement allows you to pay a lower amount to your creditors. To do this, you typically work with an outside company, and this company works with your creditors to find an amount which you can repay which will be more manageable but still give your creditors the money they are owed.

The 341(a) meeting with creditors

Filing for chapter 13 bankruptcy in Texas is often a method of finding relief from creditors. However, even after a person has already filed, creditors still have an opportunity to ask him or her questions. According to the U.S. Bankruptcy Court for the Western District of Texas, this occurs at the 341(a) meeting, and it is conducted by the trustee or administrator of the case.

Creditors have the right to ask about the debtor’s finances, including his or her behavior and activities as they relate to financial affairs, as long as the issues they want to discuss are relevant to the case. This could involve questions about any exemptions that were claimed, and the dischargeability of obligations to that creditor. Attendance is mandatory for the debtor, but creditors may choose not to attend.

Should you seek debt relief with a no-interest credit card?

High-interest credit card debt may be stretching your budget thin in Texas. Unless you are paying more than the minimum on each, getting multiple cards down to a zero balance could feel impossible. As a result, transferring all the accounts to a single credit card with a 0 percent annual percentage rate could sound like an excellent form of debt relief.

However, this may not be the solution you are looking for. NerdWallet explains why.

Making the decision to file for Chapter 7

From the unanticipated loss of your job to medical problems and lawsuits, there are various reasons why you may have found yourself facing financial hardships. Unfortunately, financial problems can spiral out of control and snowball into an even larger crisis. If you are facing financial difficulties, you may be considering bankruptcy. At The Law Office of Douglas J. Powell, P.C., we know how beneficial this route can be for people who are struggling in Austin, and across the state of Texas. For some, Chapter 7 is the right approach, but it is important for you to carefully go over your different choices beforehand.

When looking into Chapter 7, you should familiarize yourself with the means test and ensure that you are qualified for Chapter 7 based on your debts, assets, and income. Often, people who are able to work through the Chapter 7 bankruptcy process can retain some of their assets, such as a family home or vehicle. However, it is crucial to remember that each situation has unique details, so you need to find an individualized approach that will work out best given your circumstances.

Rewards programs and credit card debt

When people in America do not have enough money to purchase something they want, they may be tempted to put it on a credit card. While some are careful to pay off their credit card balances at the end of every month, a number of people overcharge their credit cards. As a result, they are unable to pay off their balances and begin racking up credit card debt. Some credit card companies encourage people to use their cards, offering them attractive rewards points that can go to free travel, discounted items and money in the bank.

In 2016, revolving debt, or the amount of money people use on their credit cards, reached a new seven-year high. Some of this may be due to incentive programs that credit card corporation’s use to entice spending. Rather than using credit cards that do not have rewards points, Americans have shifted their spending on cards that do offer these incentives. People who are not careful to never charge more than they can pay off may find themselves emerged in debt in an attempt to get as many rewards points as possible.

Student loan scam tackled by federal agency

Many people in Texas and across the United States struggle with student loans and other types of debt on a daily basis. Although years of college and post-graduate school may have helped them get into the perfect career, it often ends with high amounts of student loans that must be repaid once the degree is earned. Students loans usually cannot be eliminated through bankruptcy, leaving people to find other ways of paying back their high student loans.

Unfortunately, one program that offered debtors relief from their student loans probed to be a scam that took more than $11 million from Americans. The director of the Federal Trade Commission’s consumer protection bureau warned people to avoid paying fees up-front to companies that promise to provide debt relief. This is what happened when a myriad of student loan debt relief companies owned by the same person offered financial relief to people who had accumulated overwhelming amounts of student loans.

Payday loans are no quick fix

When you woke up this morning, did you think about your bills? Did you flinch because your phone rang? Did you take a deep breath before you checked the mail? Do your cupboards say it's time to buy groceries, but the calendar says payday isn't for another week?

Maybe today is the day you planned to stop at the payday loan office in town and get some cash just to see you through the week. If you have done this before, you know how easy it is. However, has it helped you get out of your frustrating financial situation?

How a repayment plan can change your life

If you are considering filing for Chapter 13 bankruptcy, you are required to create a repayment plan to pay off your debts. According to U.S. Courts, people who file for Chapter 13 have anywhere from 36 to 60 months to pay off the money they owe to creditors. Keep in mind that your monthly plan payment will be less if you choose the 60 month, or five-year option. However, it will take longer to have your bankruptcy discharged.

Repayment plans offer many benefits to debtors. They allow you to stay in your home and keep your property throughout the bankruptcy process. In other forms of bankruptcy, such as Chapter 7, debtors risk losing their property. Furthermore, some creditors may work with you to reduce the interest rate and fees associated with the account and lower the monthly payments. Not only does this make it easier to pay back the amount you owe, but it may reduce the total amount you are required to repay the creditor.