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Tyler Texas Bankruptcy Law Blog

Texas ranks 7th of states with highest credit card debt

Cash seems to be quickly becoming obsolete as more and more consumers turn to plastic to pay for their purchases. While this may not be a big shift in spending when debit cards are used, the truth of the matter is that credit cards continue to be used at a significant rate. Many consumers enjoy putting off paying for their purchases, while at the same time earning rewards. Although this can be a benefit to using credit cards, the debt accumulated through this purchasing style can quickly get out of hand, thereby leaving an individual with insurmountable debt.

In fact, Americans have racked up more than $1 trillion in credit card debt, which is up significantly from the $854 billion in credit card debt that was held just five years ago. Although some individuals are able to pay off their credit card balances each month, 60 percent are unable to. This means that they can be hit with a significant amount of interest. This is no small thing, either, especially considering that the average American owes more than $6,000 in credit card debt.

We help Texans pursue Chapter 7 bankruptcy

Texans who have to eagerly await their next paycheck just to make ends meet know the stress and worry that accompanies living paycheck-to-paycheck. There are many events that can force you to live this way, including the loss of a job, cut hours or unexpected demotion. The onset of an unexpected medical condition can also leave you struggling to get the money you need to pay the bills. Once you start falling behind on these bills, the overdue notices can quickly snowball, leaving you in a hole that only seems to get deeper and deeper.

As previously discussed on this blog, many individuals who find themselves in this position turn to payday loans that carry astronomical interest rates. These loans can lead to even more financial trouble, but so, too, can other methods of lending, like credit cards. Regardless of where they originate, interest-based loans can quickly leave you overwhelmed. These loans are best used to bridge a temporary financial shortfall, but far too often they have to be utilized time and time again.

Payday loans can lead to financial woes and bankrutpcy

Millions of Americans live paycheck-to-paycheck. Most of these individuals are one financial crisis away from financial ruin. In an attempt to bridge their financial shortfall, a lot of struggling Americans turn to payday loans. In fact, about 12 million people take out one of these loans each year. While they can be quick to obtain, thereby making them enticing, they usually carry exorbitant interest rates that can be as high as 450 percent. Even with principal loans starting at as little as a couple hundred dollars, these loans can quickly spiral out of control when they are not paid back quickly.

Let's look at an example to show how expensive these loans can be. With a principal loan balance of $1,000 at an interest rate of 172 percent, after 13 payments, an individual will repay the loan with a total of over $2,200. While the industry claims that these high-interest loans are meant to address the risk of lending to those with minimal income, the truth of the matter is that many borrowers are employed and can repay the loans. However, many do fall behind due, in no small part, to the high interest rates.

Some of the major requirements to file for Chapter 13

Bankruptcy can be a very real process through which Texans can obtain relief from overwhelming financial obligations. Whether an individual seeks bankruptcy through Chapter 7 or Chapter 13 of the bankruptcy code, an individual must meet certain federal requirements before relief can be granted. Those who fail to do so can wind up having their bankruptcy petition denied, meaning that they will then be forced to continue to struggle with their financial predicament for some time to come.

Chapter 13 bankruptcy, whereby individuals enter into repayment plans for a given period of time in exchange for the discharge of some debts, has many requirements that must be met. To start, Chapter 13 bankruptcy is only available to those individuals who have unsecured debts that are less than $394,725 and secured debts that are less than $1,184,200. Also, Chapter 13 bankruptcy is only available to those who had a bankruptcy petition dismissed within the last 180 days for a number of reasons, including failure to appear or failure to comply with court orders.

Unfair debt collection: Is it making your life stressful?

If you're like most Texas residents who have financially struggled from time to time, you understand how difficult it can be to get life back on track when circumstances, crises or even just poor spending habits have thrown your finances off balance. Although your intention may be to pay back any outstanding debts you happen to have at a given time, it's something that is often easier said than done.

You may have numerous options available to help you pay back debt and restore financial stability in your life. At some point, especially if you are past due on a particular account, the company holding your delinquent account may turn your debt over to a collection agency, who will then attempt to contact you to satisfy the money you owe. There's a big difference between legitimate collection practices and harassment, however. If you fall victim to the latter, you can protect your rights.

Medical debt still major cause of personal bankruptcies

It's practically inevitable that at some point in your life you will need medical care. Some Texans find themselves requiring more extensive treatment, though, which can lead to larger medical bills. Many hoped that the Affordable Care Act, passed during the Obama administration, would help curtail those costs and make affordable medical care accessible to all. Yet, although the legislation hoped to reduce the risk of financial ruin caused by medical expenses, the fact of the matter is that Americans are seeking medical-related bankruptcy with all too common frequency.

In fact, a recent study found that about two-thirds of all bankruptcy filings between 2013 and 2016 were related to medical conditions. This means that more than 500,000 families seek bankruptcy protection each year due to missed work on account of a medical condition or the bills associated with caring for that condition. This number is pretty consistent with pre-ACA bankruptcy figures.

What steps do I need to take to file for bankruptcy?

Once you have decided to file for bankruptcy in Texas, you will need to file a petition to file for either Chapter 7 or Chapter 13 bankruptcy. Generally, a governmental trustee will be assigned to your case to oversee the bankruptcy process. To have your bankruptcy petition approved by the court, you will need to take the following steps.

First, before you file your petition, you must undergo credit counseling from an approved agency. This counseling is generally done online and will require a couple of hours of your time and approximately $100 per session. You must complete this counseling six months or less before filing your petition.

Will I qualify for a Chapter 7 bankruptcy?

Filing for bankruptcy is often seen as a last-resort option for Texas residents struggling with debt. However, many people who have filed for bankruptcy appreciate the opportunity to start over financially and move forward with their lives. Chapter 7 bankruptcy is often one of the most popular forms of bankruptcy for individuals, as it discharges unsecured debts, offers automatic protection from collectors and creditors and allows people to complete the filing process in only 3 to 6 months. However, this type of bankruptcy is generally reserved for lower-income households who truly have no other options.

Before making any decisions, Texas residents will need to take a means test to determine whether you meet the criteria for a Chapter 7 bankruptcy. First, you will need to evaluate whether your pre-tax yearly income or gross annual income is less than the median income for the same size household in the state of Texas. If your income is lower than this median income, you are automatically eligible file for Chapter 7 bankruptcy.

Talk to an attorney to stop creditor harassment

Many Texas residents are struggling financially to make ends meet, and, as a result, they may not be able to make their credit card payments every month. Once you fall behind on your payments, it can be difficult to catch up. Meanwhile, you may have creditors bombarding you with phone calls, letters and e-mails. Creditor harassment is against the law, but that doesn't stop many creditors from going to extremes to get their money.

Fortunately, there are ways to put an end to the harassment. At the Law Office of Gordon Mosley, Attorney Mosley can help you file for bankruptcy protection under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Once you file, an automatic stay will go into effect, preventing creditors from contacting you altogether. The automatic stay will also buy you some time to potentially save your house, by stopping the foreclosure process. It can also stop your vehicle from being repossessed and stop bank account seizures. If your creditors have filed lawsuits against you, they will also come to a stop with the automatic stay.

Texas cupcake chain files for Chapter 11 bankruptcy

Anytime an individual or business is struggling to stay afloat, they may consider bankruptcy as a viable option. Gigi's Cupcakes, a cupcake chain based in Texas, recently filed for Chapter 11 bankruptcy protection after facing multiple lawsuits. Gigi's apparently has multiple shops in Texas, in places such as Dallas and Fort Worth, and operates dozens of franchises all across the country.

Gina 'Gigi' Butler apparently started the business in Nashville in 2008 and in 2016, sold it to FundCorp, an investment firm in Fort Worth, for $6 million. However, 18 of her franchisees filed a lawsuit against her, as well as her business partner and parent companies, for financial misrepresentations that negatively affected the franchisees chances for success. According to the lawsuit, Gigi's defrauded the franchisees by failing to provide accurate labor numbers. One franchisee says he invested $700,000 to $800,000 to open two stores but had to find a full-time job when shop sales continuously declined.

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