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Chapter 7 Bankruptcy Will Stop Collections & Wage Garnishements

Often filing for a Chapter 7 bankruptcy is seen as the final step in a personal financial crisis. While this thought is understandable, it’s more realistic to view a Chapter 7 bankruptcy as the beginning of your new financial freedom. Each chapter 7 bankruptcy lawyer at Fears & Nachawati offers free consultations 7 days week througout Texas.

What is Chapter 7 bankruptcy & Will It Ruin My Credit?

When you file for Chapter 7 bankruptcy all collection efforts by creditors must stop under federal bankruptcy law. What this means is that creditors must end all liens on your paycheck, foreclosures and repossessions.

“Will filing bankruptcy ruin my credit?” This is a common question asked by individuals contemplating a chapter 7 bankruptcy filing. Usually this question is answered by asking another question, “If you are considering chapter 7 bankruptcy, isn’t your credit already ruined?”

Individuals in serious financial crisis generally wait too long before seeking assistance. A recent survey by the Consumer Bankruptcy Project, a continuing study of consumer bankruptcy filings, found that over 40 percent of individuals said they struggled with financial difficulty for more than two years before filing bankruptcy.

If you are facing a serious financial crisis, it is in your best interest to educate yourself and to identify your financial options. Waiting can only exacerbate the situation. Sometimes individuals try to “save the sinking ship” by taking on more debt (e.g. a home equity loan) to solve their debt crisis. Others empty their retirement accounts to pay down short-term debt. These tactics are short-term solutions and will rob your family of its future financial health. Even sadder is that many individuals discover that their quick fix solutions did not solve their financial problems – only now they are facing chapter 7 bankruptcy with no equity in their home, or without a retirement account.

A chapter 7 bankruptcy filing will stay on your credit report for ten years and may have a detrimental impact on your ability to borrow money (at least in the short run). However, chapter 7 bankruptcy will also lighten your debt load significantly and give you a second chance to arrange your finances in a way that is manageable for years to come. If you are facing serious financial difficulties, speak to an experienced chapter 7 bankruptcy attorney before taking a quick fix route just to save your credit score. Don’t be “penny wise and pound foolish.”

How soon after wards can I buy a home?

Most people qualify within1-2 years. Some factors that mortgage lenders will consider most important at the time you apply for a home loan will be your job, current credit status and down payment.

If you seek refinancing from Fannie Mae and Freddie Mac after your Chapter 7 bankruptcy, the discharge must have been granted more than four years previously. FHA requires two years between the discharge date and a home loan. Borrowers must show a good credit history since the discharge and the ability to manage personal finances. In some cases a borrower may obtain financing before the two year mark, if there is evidence of extenuating circumstances causing the bankruptcy. Learn More

Benefits of Chapter 7 Bankruptcy & Bankruptcy's "Fresh Start"

When you file for a Chapter 7 bankruptcy, an automatic stay is placed on your debts. This means that your creditors must stop collection activity, including liens, and attempts to foreclose and repossess your property.

Contrary to what some creditors or collection agencies may tell you, there is nothing illegal about filing for chapter 7 bankruptcy. In fact, it is your right to file for chapter 7 bankruptcy protections.

Filing for Chapter 7 bankruptcy will place an automatic stay that will help protect you against:

• Liens on your paycheck or bank account
• Foreclosure of your home
• Repossession of your vehicle

The principal theory of consumer bankruptcy in America is that it provides a “fresh start” to debtors. A prime example of this policy is found in the 1918 Supreme Court case of Stellwagen v. Clum in which the Court stated:

“This purpose of the act has been again and again emphasized by the courts as being of public, as well as private, interest, in that it gives to the honest but unfortunate debtor . . . a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

The idea of giving a poor, but honest debtor a “fresh start” is not a modern concept. The Bible also contains debt forgiveness laws:

“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord's release.” Deuteronomy 15:1-2.

Under modern bankruptcy law a debtor is entitled to a Chapter 7 bankruptcy discharge once every eight years. However, this is not a clean slate. A Chapter 7 bankruptcy can stay on your credit report up to 10 years, and you may encounter other obstacles after filing bankruptcy (e.g. obtaining credit). Several bankruptcy courts have described the Chapter 7 discharge as giving honest but unfortunate debtor a fresh start, not a head start.

Chapter 7 bankruptcy is a safety net when you are at the end of your rope. The Chapter 7 discharge provides a second chance and a new beginning free of creditor harassment. If you are burdened with debt, consult with an experienced chapter 7 bankruptcy attorney and discover how a fresh start under the law can help you.

Court fees

The court fee to file a Chapter 7 bankruptcy in Texas is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Bankruptcy attorney fees

Many chapter 7 bankruptcy attorneys are willing to work out a reasonable payment plan so you
can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck, a foreclosure on your home or repossession of your vehicle. Additionally, most chapter 7 bankruptcy attorneys offer a free consultation to discuss your specific financial situation and to determine if a Chapter 7 bankruptcy is the best choice for you.

Am I eligible to file Chapter 7 bankruptcy?

In order to be eligible to file for Chapter 7 bankruptcy, you must meet all of the following criteria:

• You must have received credit counseling within the six months prior to filing for Chapter 7 bankruptcy.
• You cannot have received a Chapter 7 bankruptcy discharge within the past eight years or a Chapter 13 discharge within the past six years.
• You must pass the Chapter 7 bankruptcy Means Test. You qualify for Chapter 7 bankruptcy if your income is less than the median income for a family of your size in your state.
• You cannot have had a prior bankruptcy petition dismissed within the past six months on account of failure to appear before the court or failure to follow court orders.

Chapter 7 Bankruptcy Fees Compared To Debt Consolidation

Many debt consolidation companies want you to believe that a Chapter 7 bankruptcy is expensive and that it will destroy your credit. Nothing could be farther from the truth. Chapter 7 bankruptcy fees are relatively low compared to a lien on your assets or endless payment plans that you probably cannot afford on a long-term basis and that will eventually lower your credit score. Learn More

Take Advantage of Free Chapter 7 Bankruptcy Consultations

While it is true that you can file for chapter 7 bankruptcy on your own, bankruptcy laws can be very complicated. Unless you have working knowledge of the current chapter 7 bankruptcy laws, you may miss something that can benefit you. For example, many people who file on their own still have problems with creditors sending them letters and removing the debt from their credit report. This is an aggressive tactic that many creditors use when they know someone does not have a chapter 7 bankruptcy attorney. They know these actions are unlawful but will continue because they know that the average person does not fully understand their rights under Texas bankruptcy law. You can avoid being a victim of this tactic by speaking to an experienced chapter 7 bankruptcy attorney.

Many chapter 7 bankruptcy attorneys are willing to work out a reasonable payment plan so you can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck or repossession of your vehicle

Chapter 7 and Buying a Car

All Texans know how important it is to have a car. You need it for work and for daily activities such as grocery shopping and running other errands. For others it means the difference between having a job or not.

How soon afterwards can I buy a car?

Typically 1-2 years. Used and new car dealers are very agreeable to extend credit to people who have a discharged Chapter 7 bankruptcy. They do so because the applicant now has no debt and is able to make timely payments. The key is to keep your credit clear and make payments on time.

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Library for Chapter 7 Bankruptcy:

Six Reasons to Choose Bankruptcy Over a Debt Settlement Program
For a person in financial trouble, examining options can mean the difference between a fresh start and a false start. Before you decide to use a debt settlement program to resolve your debt problem, arm yourself with information and make a wise decision. Below are six reasons that the federal bankruptcy laws may be a better choice than a debt settlement program:
Choosing Chapter 7 Over Debt Settlement Program
For a person in financial trouble, examining options can mean the difference between a fresh start and a false start. Before you decide to use a debt settlement program to resolve your debt problem, arm yourself with information and make a wise decision. Below are six reasons that the federal bankruptcy laws may be a better choice than a debt settlement program:
Redeeming Your Vehicle During Chapter 7 Bankruptcy
Redemption is a process during a Chapter 7 bankruptcy case where a debtor is able to retain a vehicle by paying the secured creditor the value of the vehicle, not the total debt that is owed. For example, if you owe $15,000 to Ford Motor Credit, but the car securing the debt is only worth $10,000, you can use the redemption process to pay only the value of the vehicle ($10,000), keep the car, and discharge the remaining unsecured debt ($5,000).
There Are Many Myths About Filing Chapter 7 Bankruptcy
This myth is based in some truth. Tax debt is especially hard to discharge, and in some cases the debtor may not discharge tax debt. The truth is that discharging tax debt often depends on how long you have had the tax debt and what has happened in the meantime.
What Is The Role Of A Chapter 7 Trustee
Once your Chapter 7 bankruptcy case is filed, an impartial case trustee (sometimes called an “interim trustee” or “panel trustee”) is appointed. The main functions of the Chapter 7 trustee are to oversee and administer your bankruptcy case.
Being In The Military Can Equal Special Protections Under Bankruptcy Law
In recognition of the potential economic hardship that extended military service may impose on our reservists and national guardsmen, Congress has made a special exemption from the bankruptcy means test. Members of the Reserves or National Guard who file bankruptcy while on active duty or within 540 days after release from active duty are excluded from all forms of means testing. The means test is a mandatory calculation that determines whether the debtor’s income is low enough for you to file Chapter 7 bankruptcy.
Will Bankruptcy Take My Children's Property?
A common question from bankruptcy debtors is, “Do I have to list property that belongs to my child?” The answer is, “It depends.” If the child is a minor, you likely own any property that you purchased for the child, like bedroom furniture, clothing, toys, etc, even if you gave the property as a gift.

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Fears | Nachawati
4925 Greenville Avenue
Suite 715
Dallas, Texas 75206
Phone: 214-890-0711
Toll Free: 866-705-7584
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