Bankruptcy laws exist to help beleaguered Americans in their time of need, when their options run out and debt collectors come calling. Life’s unforeseen disasters can wreak havoc on your financial plans, whether they’re sudden medical bills, job loss, business failure or anything else, you can find yourself at the end of your financial rope faster than you expect. Everyone’s financial futures are in flux during these uncertain times, but bankruptcy attorneys can throw you a lifeline when things get out of control. The bankruptcy experts at Allen Stewart P.C. have years of experience handling all kinds of personal bankruptcy cases and can help guide you through the process and get you back on track to financial health.
Allen Stewart’s bankruptcy professionals will work with you to determine the best financial path forward, examining your financial records and circumstances to better create a plan that works for you. However they can’t help you until you reach out and get the process started. The longer you wait the more your financial issues can compound, so contact the law office of Allen Stewart P.C. today and meet with a bankruptcy expert. Your initial consultation with our bankruptcy experts is free.
Many associate bankruptcy with disaster, as if it’s the end of the world for your financial future. In fact, it’s the chance for a new beginning. Bankruptcy stops debt collectors from harassing you, and halts actions against you giving time to reorganize your finances. Depending on what type of bankruptcy your attorney suggests, you can wipe away much of your debt or repackage it in a way making it easier to repay over time. While bankruptcy does negatively affect your credit score, so do delinquent bill payments and foreclosures; many bankruptcy clients have nowhere to go but up. Simply by no longer being behind on bills, your situation can improve.
A good rule of thumb when considering bankruptcy is if your consumer debt equals more than half your income, or it would take you five or more years to pay off your debts even if you go to great lengths to save money, you should consider filing for bankruptcy. The longer you wait to file the more damage you do to your credit score, as well as mounting bills and late fees. The distinction “consumer debt” is important as certain types of debt, including student debt, cannot be discharged in bankruptcy.
The “Means Test” in Texas determines if you qualify for Chapter 7 bankruptcy and knowing if you can or not can help you decide ahead of time whether to file. The means test compares your household income to the Texas median income, determined by averaging monthly income over the past six calendar months and multiplying that figure by 12.
For example, if a single person with no kids makes less than $47,238 per year, they pass the means test automatically. Two person households must make less than $63,148, three person households less than $69,294, and four member households less than $78,572. The idea behind the means test is if you can afford to pay your debts, you don’t need to file for bankruptcy.
However just because your income exceeds those thresholds doesn’t necessarily mean you don’t qualify for bankruptcy. You just must answer additional questions to overcome the “presumption of abuse.”
The U.S. Congress overhauled American bankruptcy laws in 2005, passing the Bankruptcy Abuse Prevention and Consumer Protection Act. The Act contains several provisions intended to discourage Americans from filing bankruptcy when they could still repay their debts. The means test was among those provisions.
Bankruptcy applicants making more than the median income for their household size must provide specific reasons for why they can’t repay their debts despite their income. Those reasons can include recent job loss, medical conditions, income reduction, recent divorce, active military duty or other special circumstances. Part of filing for bankruptcy protection involves frank, open conversations with your bankruptcy attorney about your income and expenses, including how much you spend on food, housing, utilities and any legally mandated payments such as back taxes. These expenses factor into your bankruptcy filing, letting the court know how much you must pay to stay solvent while meeting your bankruptcy obligations.
If you make too much money for Chapter 7 bankruptcy but still need bankruptcy protections, Chapter 13 bankruptcy may be your best option. Chapter 13 bankruptcy can help those who make more money but not quite enough to right their financial ship without help. Chapter 13 is a longer process than Chapter 7, as it helps debtors pay off their debts over a long span of time as opposed to wiping the debts clean entirely. Chapter 13 bankruptcy proceedings package the debts into a single payment made to a court-appointed trustee. The trustee then disburses that money to creditors per the agreement made in bankruptcy court. One caveat is home payments are not included in the bundle, so debtors wanting to keep their home must continue making their mortgage payments as normal.
Chapter 13 bankruptcy clients must have no more than $394,725 in unsecured debt, including credit cards bills or personal loans. They also can have no more than $1,184,200 in secured debts, including car loans and home mortgages. Filing for Chapter 13 bankruptcy puts a stop to foreclosure proceedings in progress, giving clients time to make those mortgage payments and stay in their home.
The process begins the same way for both Chapter 7 and Chapter 13 bankruptcies. Once a potential client reaches out to a bankruptcy attorney, they meet and discuss their financial circumstances and what options would help them the most. The client works with their bankruptcy attorney to determine what assets they can keep and then takes a mandatory credit counseling course online. The course is vital in that it helps the client learn best practices for life after bankruptcy, ensuring they’ll not only be better off after bankruptcy but stays better off.
The client and their attorney must, within 45 days of the attorney filing paperwork with the court, attend a 341 Meeting of Creditors. The client, their attorney, their creditors must attend the meeting with an agent of the court. The client and their attorney explain the circumstances surround the bankruptcy, answer the court agent’s questions and present all required documentation. Creditors then have 60 days after the meeting to object to any debt discharge, or claim the debtor did not act in good faith. Otherwise if the client finishes all required financial management courses and makes all required payments, they eventually receive their orders of discharge.
Coming to the realization you need bankruptcy help can be jarring, but it’s not the end of the world. The bankruptcy experts at Allen Stewart P.C. are ready and able to help guide you through the process and get your financial house in order. For the sake of your family, your finances, and your future, contact Allen Stewart P.C. today.