William H. Lively, Jr

Smith County Bankruptcy Blog

Student debt may be discharged in bankruptcy in some cases

Student loans are generally not dischargeable in bankruptcy, but there are circumstances under which a person may be able to have them discharged. For people in Texas who are struggling to make their student loan payments, the most common bankruptcy options are Chapter 7 bankruptcy and Chapter 13 bankruptcy. In order for student loans to be discharged, the bankruptcy petitioner must establish that repayment would constitute an undue hardship. The Department of Education has made efforts to create a concrete definition of the term, but undue hardship is still decided on a case-by-case basis.

Most bankruptcy courts apply the Brunner test in determining whether the petitioner has established an undue hardship. In order to pass the Brunner test, the petitioner must demonstrate three things. First, the petitioner must show that his or her income and expenses will not allow for a basic standard of living if student loans must be repaid.

Medical marijuana and Chapter 13 bankruptcy

Cannabis has been a difficult topic for companies seeking protection in Texas and across the country. As cannabis is legalized for recreational or medical use in a growing number of states and decriminalized in many more, the number of businesses associated with cannabis has grown. At the same time, some of these companies have failed and sought protection in bankruptcy courts. Overall, these companies have had a difficult time with many courts holding that the continuing federal criminalization of marijuana means that these companies can find no relief in the bankruptcy laws.

One Chapter 13 bankruptcy case involves the issue of medical marijuana but in a personal bankruptcy rather than in a corporate filing. Chapter 13 bankruptcy is an option that can help people to keep their assets while they pay off their debts in a court-approved payment plan. For people who make too much money to be eligible for Chapter 7 bankruptcy but still face crushing debt, Chapter 13 can be an important step toward debt relief. In order to construct the plan, the court will deduct monthly expenses to determine how much disposable income the debtor has.

3 ways bankruptcy can help you keep your house

Problems in one area of your financial life can quickly ripple out to influence other aspects of your life. For example, high levels of medical debt or credit card debt could quickly begin to exert pressure on your financial stability.

When you have to try to make the monthly minimum payment on an outstanding debt, you may struggle to pay all your utilities or your mortgage on time. Some people can even make the regrettable mistake of cashing out some of their home equity as a way to pay off otherwise unsecured debts.

Medical problems double the chance of bankruptcy

A research study from the American Bankruptcy Institute indicates that people in Texas and across the country have double the likelihood of filing for bankruptcy if they have had a gap in health insurance coverage of at least two years. The study included information from the Bureau of Labor Statistics for more than 12,000 people and found a strong link between consumer bankruptcy filings and health insurance coverage interruptions.

The statistical link was present even when researchers controlled for things like debt-to-income ratio and earnings overall. Health insurance coverage interruptions were often related to other factors that can cause bankruptcy, like divorce, health issues and lower annual incomes. It is common for people who have health insurance to get coverage via their jobs, so an interruption of employment might interrupt both income and health insurance coverage. Moreover, health problems can sometimes lead to instability in employment. Prior studies have shown that more than 66% of bankruptcy filings are linked to medical problems.

What to know about bankruptcy

Individuals in Texas may be able to erase some or all of their debts by filing for bankruptcy. The two most common forms of bankruptcy are Chapter 7 and Chapter 13. A Chapter 7 proceeding is often referred to as a liquidation bankruptcy. To qualify for this type of protection, an individual must pass a means test that seeks to determine if he or she has the ability to repay creditors.

A Chapter 13 case is generally referred to as a wage earner's plan. Debts are repaid over a period of three or five years, and any remaining unpaid balances are discharged at the end of the repayment period. Furthermore, debtors generally get to keep their property during this period. Anyone who files for bankruptcy may experience a variety of negative consequences. In some cases, debtors could see their credit scores fall up to 200 points after filing.

Choosing the right type of personal bankruptcy

Many people in Texas are struggling with insurmountable debt burdens, annoying or harassing collection calls and difficult financial circumstances. They may be looking for an exit to a new financial future that can offer significant debt relief. People who are unable to pay their debts may turn to personal bankruptcy as a solution that helps them move forward with their lives. There are two major types of personal bankruptcy: Chapter 7 and Chapter 13. The right type of bankruptcy for each person may vary depending on financial circumstances, property ownership and other issues.

A Chapter 7 bankruptcy involves liquidating assets and selling them to pay off creditors in part. After the bankruptcy is completed, all eligible debts will be eliminated. Not all debts can be addressed in bankruptcy, including student loans and child support obligations. However, people must generally liquidate their property beyond the exceptions allowed under law. In addition, there is a means test to determine eligibility for Chapter 7 bankruptcy. Only people who make the median income in their state or below are eligible to file for this type of bankruptcy, making it unsuitable for high earners who also have unsustainable debts.

Credit card debt a long-term burden

Many Texas residents struggle to make ends meet, especially if they are drowning in credit card debt. It can be all too easy for credit card obligations to add up, especially as interest rates climb. While many people intend to pay off their balances every month, it can be difficult to do so, especially if people needed to use their cards to pay for a large purchase. In other cases, people lost their jobs or faced other changes to their financial circumstances that made it much more difficult to pay their bills. Still, many financial experts advise avoiding rolling credit card debt as much as possible.

However, according to reports, 82% of all credit card balances are carried past a month and often turn into long-time debt. This is true not only for people struggling with bad credit but also for those with high credit scores. Most of this debt remains for some time; around 70% of these balances revolve for at least a year and 55% of these balances remain for at least two years. Many people are inspired to open a credit card, make a large purchase or transfer a balance by a low introductory interest rate. However, the rate can soon rise to as much as 28%.

How Chapter 13 bankruptcy can help you stay in your house

Far too many people conflate bankruptcy with poverty. It is possible for individuals with successful careers and high income to wind up over their heads and struggling to make ends meet. You can be a homeowner with a stable source of income and still find yourself precariously close to foreclosure because of your debt.

The good news for people struggling to stay afloat financially is that bankruptcy protections can often make all the difference when they fall behind on mortgage payments. Chapter 13 bankruptcy allows you unique opportunities to protect your equity in your home and take control of the debt that is causing your current issues.

Dealing with a debt collection lawsuit

People in Texas may be deeply concerned about what to do if they receive a letter from a debt collector threatening a lawsuit. Their concerns may escalate if they learn that a case has been filed against them. This situation adds stress to the lives of people who are already struggling to pay their bills and facing calls from collection agencies. Over 70 million people across the country have dealt with collectors, and a full one-fourth of those felt threatened during their dealings.

As a result, people may be confused about what they can do to protect themselves and want to avoid the situation altogether. However, being aware of their rights under the law can help people to protect themselves. If people receive a summons and complaint over a debt, they should make sure to respond. Some people may feel like there is nothing they can do, but ignoring it can lead to a default judgment. People who are being sued can file an official answer by the specified deadline with the local court clerk.

Many Americans do not realize they are in debt

In Texas and across the United States, 20% of Americans do not know whether they owe money on their credit cards, and 30% have no knowledge about their credit line interest rates. A current U.S. News & World Report survey also shows that 24% of Americans have debts equaling more than $10,000. Furthermore, 25% of the survey participants indicate they have revolving balances as high as $2,000 on their credit card accounts. In addition, 16% of the participants do not know how much money they owe on their credit cards.

The majority of participants say they confine their credit card debt to one card. On the other hand, 60% of Americans taking the survey say they pay their credit card statements by the due dates and do not have any credit card debt. Yet many Americans struggle with mounting financial problems. Many workers live from paycheck to paycheck and struggle to pay their bills.

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William H. Lively, Jr


William H. Lively, Jr
432 S Bonner
Tyler, TX 75702

Phone: 903-920-0008
Phone: 903-593-3001
Fax: 903-595-3715
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