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Tyler Texas Bankruptcy Law Blog

Financial distress: What causes it and how can you resolve it?

Many Texas residents are currently facing serious financial crises. If you're one of them, you may be worried that, if you don't get things back on track soon, your home or other possessions will be at risk. It's not uncommon for finances to fluctuate according to circumstances in life. You may have some years that are financially strong and stable, and others where it's difficult to make ends meet.

When people discuss what types of issues have led to financial distress in their lives, they often have a lot in common. There tends to be several main issues that most often prompt serious financial problems and credit card debt for U.S. residents. Most financial crises are temporary, so it's always best to try to remain calm and research what types of options may be available to help rectify the situation.

Chapter 13 can provide debt relief for those with regular income

Texans who are experiencing problems with debt will frequently consider a variety of alternatives to get on stronger financial ground before considering the potential benefits of bankruptcy. Once they understand that bankruptcy is a perfectly legal and viable solution to improve their financial standing, they are still puzzled by which chapter would be best for their situation. The circumstances will dictate the final decision, but for wage earners, Chapter 13 is frequently considered the ideal option. Understanding why is the key.

Technically, Chapter 13 is an Adjustment of Debts of an Individual With Regular Income. It is used to let a debtor with a source of income have a plan in which they make payments for a certain time-period. This generally lasts for three to five years. For those who are debating on Chapter 7 vs. Chapter 13, there are a number of factors they should keep in mind. For example, people who have assets like a home or a motor vehicle will want to pick Chapter 13 as it allows them to retain the property. Chapter 7, a liquidation process, does not allow that in most cases.

Does Chapter 7 bankruptcy eliminate all my debts?

No one ever wants to file for bankruptcy, but for Texas residents who are struggling with debt, it may be the best option. The most common form of bankruptcy for individuals is Chapter 7 bankruptcy. While Chapter 7 bankruptcy will eliminate many of your debts, there are certain debts that will not be discharged.

Generally, student loans are not discharged in a Chapter 7 bankruptcy, but the court may choose to discharge it if the judge determines that the loan imposes an undue hardship. Courts will consider three main factors when determining whether to discharge your loan. First, they will look at whether paying off the loan makes it impossible for you and your family to maintain a minimum standard of living. Next, they will look at whether your financial situation will last for a significant portion of the repayment period. Finally, they will consider whether you made a good-faith effort to repay the loan in the past.

What happens if I don't pay my credit card debt?

Many families put a lot of extra charges on their credit cards during the holiday season, and it may be difficult for them to pay their credit card bill when the time comes. If you fail to make your credit card payments, the credit card company may eventually sell your account to a collection agency.

The credit card company or the collections agency may exercise their creditors' rights and file a lawsuit against you in civil court for the balance on your card. This will not happen right away, as companies will often try to collect debts for over a year before they go after you in court. Generally, if the court finds in their favor, the agency or company will be allowed to collect your debt by garnishing wages and tapping into your bank account. However, they won't be able to sue you forever. Each state has its own statute of limitations that prevents agencies and credit card companies for suing for unpaid debts after a certain period of time. For example, in Texas, debt collectors can only sue for debts that are less than four years past due.

Former "Top Chef" star files for Chapter 7 bankruptcy

Celebrity chef Mike Isabella, who got his start on Top Chef, has filed for Chapter 7 bankruptcy on behalf of his parent company, Mike Isabella Concepts. By filing for Chapter 7 bankruptcy, Isabella is closing the doors to his six remaining restaurants and liquidating its assets to pay off debts.

Isabella had previously closed several restaurants, including Isabella Eatery, which closed in August 2018. In September 2018, Isabella filed for Chapter 11 bankruptcy to reorganize his company. However, despite Isabella's efforts to move forward, he was unable to save his company.

Facing the facts about wage garnishment

Falling behind on your debts can quickly make your life difficult. You may feel overwhelmed and anxious most of the time, especially at night when you are trying to fall asleep. If you could pay your bills, you would, so when a creditor threatens to garnish your wages, it may increase your anxiety.

Because wage garnishment is a long process, you will likely have plenty of warning. However, if you are like many people under the burden of debt, you may have stopped opening your mail months ago and missed the notice that your creditor was taking you to court. If your paychecks are now suddenly much less than they were, you may want to seek some legal advice about your alternatives.

What can an automatic stay accomplish during bankruptcy

If you are struggling to pay back your debts, you may have to deal with bothersome creditors and bill collectors. Additionally, you may be worried about keeping their homes and keeping the lights turned on during this difficult time. Fortunately, bankruptcy may allow you to have some peace of mind due to an automatic stay that kicks in as soon as you file.

An automatic stay essentially keeps creditors and bill collectors at bay for a certain period of time. For instance, the automatic stay can require the utility company from turning off your gas, electricity, or water for a minimum of 20 days.

Chapter 7 or Chapter 13 bankruptcy: which should you choose?

Once you have made the difficult decision to file for bankruptcy, you will have to decide which type of bankruptcy you should file. Most individuals will choose between Chapter 7 and Chapter 13 bankruptcy. While the general idea is the same (to eliminate debt), each type of bankruptcy comes with its own pros and cons.

People with minimal assets and/or below-average incomes in their state should qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy is useful in that it allows people who cannot pay back their debt to eliminate it by getting rid of their non-exempt property to pay off creditors. The process will only take a few months and you may even be able to keep some property if it qualifies as exempt. However, keep in mind that a Chapter 7 bankruptcy will be on your credit reports for up to 10 years after your filing date, thereby affecting your ability to apply for credit and acquire loans.

What to expect when filing for Chapter 7 bankruptcy

If you find yourself overwhelmed by the debt you are facing, it may be time to consider filing for bankruptcy. Deciding to file for bankruptcy may be one of the hardest decisions you have to make, so it is important to thoroughly research all your options before you officially file. A bankruptcy attorney in Texas can review your case and help you make the decision that is best for you and your family.

Generally, many individuals decide to file for Chapter 7 bankruptcy, which has many pros and cons. Once you file the necessary paperwork for a Chapter 7 bankruptcy, it may only take three to six months for you to become debt free. Another positive is that some of your assets will be exempt from bankruptcy and you may be able to keep money you earn and property you buy after filing. After about one to three years of filing, you will be able to obtain credit again, though it may be at a higher interest rate. Declaring for bankruptcy allows you to get a fresh start, relieving you of many of your financial obligations, freeing you from significant debt and protecting you from aggressive collection tactics.

David's Bridal files for Chapter 11 bankruptcy

Both individuals and companies have the option of filing for bankruptcy protection when their debts become overwhelming. Nowadays, more and more U.S. companies have had to file for bankruptcy due to major changes in the marketplace. David's Bridal, the largest bridal retailer in the country, recently filed for Chapter 11 bankruptcy protection.

The company, which was acquired by Clayton, Dubilier & Rice for over $1 billion in 2012, has been struggling due to the increase in online bridal retailers and non-bridal retailers such as H&M. The company has also struggled due to the fact that couples nowadays are marrying later in life and spending less on weddings in general. The company apparently has been slow to adapt to the idea that more people are choosing to wear informal dresses that they can wear again over traditional bridal gowns that can only be worn once.

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