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Tyler Texas Bankruptcy Law Blog

Texas, federal laws prohibit certain collection tactics (Part 2)

Tyler residents are fortunate to enjoy the protection of robust laws protecting against unscrupulous efforts to collect debts. When it seems that creditors' rights take precedence over just about any other concern, it is important to understand just what these protections entail, whether at the state level - as we reviewed previously - or at the federal level.

Looking at the federal level, the Fair Debt Collection Practices Act is narrower in scope than the laws on the books in Texas. Texas law regulates any collection efforts arising from a consumer debt. Federal law, however, specifically focuses on debt collectors hired by professional agencies and law firms. While dealing with a smaller group, it does provide some enhanced protections relative to this group.

Texas, federal laws prohibit certain collection tactics (Part 1)

Tyler residents struggling to manage their debt are likely familiar with the types of tactics employed by collection agencies. On the one hand, creditors' rights do include attempting to contact the debtor (within certain limits) and perhaps even selling one's debt to a third-party company to collect. But both state and federal laws regulate the practice of collecting debt. Let's take a look at these two levels of legal protection -- as a general background on the subject only, not specific legal advice.

The Texas Debt Collection Act forbids collection efforts that rise to the level of abuse or fraud. That includes swearing at a debtor, accusing him or her of crimes or fraud, threatening a debtor with arrest or violence or threatening to repossess property without actually initiating the legal process to do so. Harassing phone calls are also prohibited, such as anonymous calls, repeated calls or calling collect and not revealing the reason until after the caller accepts the charges.

Debt relief for Tyler residents who rely on disability benefits

Veterans who have been injured in combat often face significant challenges as they seek to resume their lives back in Tyler and elsewhere in the United States. Physical and psychological injuries commonly require intensive, long-term treatment and can turn everyday tasks into hurdles to overcome. Recently, it was reported that thousands of veterans and their families are shocked to find that they owe thousands for survivor benefits to the government, threatening their family's financial stability.

The Survivor Benefit Plan is like a life insurance program run by the Department of Defense. When service members with eligible beneficiaries retire, they are enrolled in the program at the maximum contribution level automatically unless they complete and submit a notarized opt-out form. Deductions typically come out of their retirement pay. However, for disabled veterans who receive the majority of their compensation through the Department of Veterans Affairs instead of the Department of Defense, the agency sends monthly bills for their Survivor Benefit Plan contributions.

With rising debt, more Americans may seek bankruptcy protection

Some people say that death and change are the only guarantees in life, but you may have noticed one more -- debt. No one really tries to actively go into debt, but it seems to be one of those unavoidable aspects of life. 

Whether you take out loans to get an education or have a mortgage on your home, you know that debt can feel overwhelming. In many cases, it truly is. If you are anything like other debtors in Texas, repaying all of your debt might not be realistic. 

How can a debtor be protected by an automatic stay?

Texas debtors who are facing a litany of issues due to financial struggles might feel overwhelmed. Once their debts have reached the juncture at which they can no longer pay them, it is inevitable that the collection calls will begin. This only compounds the fear that a debtor will need to address in addition to the financial woes. Fortunately, there are alternatives to put a stop to these calls and get back on better financial footing.

Bankruptcy is a way to improve one's financial situation as well as stopping the collection calls through an automatic stay. When a lawsuit is filed by any entity seeking payment on a debt, an automatic stay puts a stop to it. It is also useful for those who are close to eviction, foreclosure, or are dealing with utilities being turned off for lack of payment.

Texas energy company reorganized in Chapter 11 bankruptcy

Businesses in Texas and throughout the country must weather all manner of financial ups and downs if they want to remain competitive and successful. Sometimes, when a financial shock take place wherein the business finds itself burdened with overwhelming debt, Chapter 11 bankruptcy is a tactic many use to reorganize and emerge as a player in the market once again, unhindered by those debts.

Recently, one Texas energy company demonstrated how this is done. EV Energy Partners shed over $350 million in debt through Chapter 11. The company now emerges from bankruptcy as Harvest Oil. With $297 million in debt remaining, and $325 million in available credit plus just over $20 million in cash, the company's liquidity is over $45 million.

Creditors may attempt collection from spouses, heirs after death

Some Tyler residents struggle with debt for most of their lives. Some may even pass away with significant debt, especially in the case of medical bills incurred late in life. The prospect leaves many wondering what happens to one's debt after death.

Unfortunately, debt does not die along with the debtor. Creditors' rights to collect the money owed to them extend to a deceased borrower's estate. The executor of the estate will be responsible for paying any debts by using the assets in the estate. That includes any cash available, and potentially selling off valuable items or properties if more funds are needed to cover the debts.

Can creditors stop the discharge of debt in a Chapter 7 filing?

When Tyler residents are struggling with overwhelming debt, the law provides an option from them to obtain a truly fresh financial start. Chapter 7 bankruptcy allows debtors to eliminate many debts that are unsecured (i.e., not associated with property like a mortgage or a car loan). We say that the debt is discharged -- that is, it no longer has to be repaid.

However, some of our readers may wonder: can creditors object to a discharge in Chapter 7 bankruptcy? The answer is yes, creditors can object once they have been notified of a Chapter 7 filing. When they do so, they initiate a legal action called an adversary proceeding. In some cases, the discharge may be denied if the objection in the adversary proceeding is valid.

You do not have to tolerate harassment from creditors

One of the most stressful and overwhelming aspects of owing a lot of debt is constant contact from creditors and debt collectors. If you are past due on your payments, your creditors do have the right to attempt to collect on what you owe, but there are limits to what they can do. 

Regardless of how much money you owe, debt collectors cannot overstep their bounds and violate your rights. If you believe you are enduring treatment that qualifies as creditor harassment, you do not have to tolerate it in silence. There are steps you can take to protect yourself and seek a better financial future for your Texas family.

Chapter 13 eligibility requirements for Tyler residents

For Tyler residents who earn some form of income but struggle with debt, there is good news. Chapter 13 allows individuals to file for bankruptcy and obtain a fresh financial start while protecting their assets, as long as they can keep current on a court-ordered payment plan that typically lasts up to five years.

There are, however, some important Chapter 13 bankruptcy basics to understand. Notably, these include strict eligibility requirements that must be met before one can file for Chapter 13. We'll take a look this week at these requirements, with the understanding that the information is general in nature only and not to be taken as legal advice for any debtor's specific situation.

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