William H. Lively, Jr

Smith County Bankruptcy Blog

Study: Bankruptcy unlikely to affect employment

When people in Texas are dealing with insurmountable debt, collection calls or lawsuit threats, they may not be sure which step to take. Bankruptcy may provide debt relief, but many people are worried about filing because they are concerned about potential other effects on their lives. Bankruptcy does have a serious impact on a person's credit report. However, many people are worried more about the potential for effects on other areas, especially their ability to find and get a job. They may know that some employers, insurance companies and others review credit reports when making decisions.

According to one study, a bankruptcy flag on a credit report may have little effect on people's ability to find and keep a job. Researchers examined two groups of people who had filed for bankruptcy, some who had filed for Chapter 7 and some who had filed for Chapter 13. A Chapter 7 bankruptcy liquidates a person's assets and provides relief for their eligible debts, and it remains on their credit report for 10 years. On the other hand, Chapter 13 bankruptcy allows people to keep their assets but mandates a payment plan. It can fall off of a credit report after seven years.

Dealing with an automatic stay for a bankruptcy

After a debtor files for bankruptcy in Texas, creditors' attempts to collect will be automatically halted under a stay. One reason why many people seek the protection of Chapter 7 bankruptcy is because it's becoming difficult or impossible to deal with creditor demands, which include lawsuits and threatened actions, repossessions or even constant collection calls. Under the automatic stay, creditors that want to proceed with an action like a lawsuit, auto repossession or lease termination need to first address the situation with the bankruptcy court. Those that do not may face significant penalties.

However, the issue of whether creditors need to actively stop existing actions that have already taken place is one that has not been fully resolved. Different bankruptcy courts have addressed the issue in different ways, and the Supreme Court is expected to decide on the issue in the coming term in order to resolve the uncertainty. In one case, a bankruptcy court penalized a creditor for failing to stop a wage garnishment action for a person in bankruptcy. The creditor was the debtor's former lawyer who had represented her in a divorce. He obtained a judgment against her for unpaid legal bills and filed for wage garnishment.

Don't fall for these 3 misconceptions about bankruptcy

You are in a situation where you feel like your finances aren't in your control. Despite trying your hardest to take on more work and pay down what you owe, you're still missing payments and dealing with fees and fines every month. Situations like this are overwhelming for people, and it's no wonder that you feel like giving up. Fortunately, bankruptcy is an option that can help you.

"Bankruptcy will ruin me!" you may think, but the truth is that bankruptcy is designed to help, not hurt, you. There are many misconceptions that it's time to clear up. Here are three things that you may think are true that actually aren't at all.

Steps to Chapter 7 bankruptcy qualification

Texas consumers who feel overwhelmed by debt may want to file for Chapter 7 bankruptcy. The first step for determining qualification is the means test, which uses the median income for the state. Most of the time, making less than this amount means the person can file.

However, there are other conditions that must be met. The person must not have had a Chapter 7 bankruptcy discharged in the past eight years or a Chapter 13 discharged in the past six. The person must also not have had a Chapter 7 filing dismissed because of fraud, misuse of the system, requesting a dismissal because of a creditor's request to lift the automatic stay or violating a court order. A Chapter 7 consumer bankruptcy petition can be filed by an individual, a couple, a sole proprietor or someone with a business partner if the person is personally liable for the business debts in question. However, a different type of Chapter 7 must be pursued for a corporation, partnership or LLC.

Refinancing could be possible after a bankruptcy filing

Having the lowest possible housing costs may help Texas homeowners who recently filed for bankruptcy keep their finances under control. Although it might have been impossible to refinance before the bankruptcy, lenders often offer refinancing options to those who have either discharged their debts through Chapter 7 or reorganized them through Chapter 13.

The length of time between filing and being able to qualify for a new loan depends on the type of mortgage product a homeowner needs. For example, in order to refinance an FHA or VA loan, homeowners only need to wait two years after the discharge of a Chapter 7 bankruptcy. Homeowners who file for Chapter 13 bankruptcy protection have to make 12 payments in order to qualify for an FHA loan or wait one year from the filing date to apply for a new VA loan.

Avoiding bankruptcy after accumulating medical debt

According to Bernie Sanders, roughly 500,000 people have gone bankrupt because of medical debt. This figure is based on a study conducted in 2019 that analyzed 910 bankruptcy cases between 2013 and 2016. It revealed that 65.5% of those bankruptcies were caused by medical debts. However, researchers are unsure as to whether the debt itself is to blame for Texas residents and others filing for bankruptcy. Instead, it may be the lost income after experiencing an injury that leads to financial distress.

Another 2019 study found that over 137 million Americans had experienced a financial hardship because of medical debt. While medical debts may be difficult to deal with, there are ways to potentially avoid going bankrupt. For example, individuals are encouraged to build an emergency fund to help pay for unexpected medical and other expenses. This fund should be able to cover a person's living expenses for up to six months.

Determining exempt property for a Chapter 13 bankruptcy

Some Texas residents who are overwhelmed by their financial obligations may wonder whether they should file for a Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy involves liquidating non-exempt assets while in a Chapter 13 bankruptcy, a person creates a payment plan to repay creditors over a period of three to five years. This allows the person to keep some assets.

A person who is filing for a Chapter 13 bankruptcy needs to have the income to repay the debt. It is necessary to determine what property owned by the debtor is considered exempt and what property is non-exempt. In order to create a repayment plan, the value of non-exempt property is added up as a minimum of what must be offered as repayment.

Can you recover from bankruptcy?

One of the most common misconceptions about bankruptcy is that you can never recover. Yes, it gets rid of your debt, but then you have that bankruptcy on your record. You can never shake it, you can never really get a fresh start. It feels like giving up on your financial future.

This outlook may be common, but it is very misguided. The truth is that bankruptcy is a fresh start. It can be a positive for your financial future. You can not only recover from it, but you can thrive after bankruptcy. It's time to put this myth to rest.

Who carries credit card debt?

Many people living in Texas and around the country carry a balance on their credit cards. Contrary to public perception of the types of people who have credit card debt, many of these individuals are older, in their 40s and 50s, and may be reasonably well-off.

Many people think of credit card debt as a problem that younger people have. This is due to the perception that younger people may misuse credit cards or that people in their 20s and 30s are more likely to have student loan debt, compromising available cash flow.

Managing medical debt

People in Texas who do not have health insurance may want to look into it. Health insurance might be out of reach for some people, but those who can afford it but think they do not need it because they are healthy should consider that they could be injured or become suddenly ill. Medical debt can mount quickly and result in serious financial problems or even bankruptcy.

Some people put their medical expenses on a credit card, but this can be a mistake as well. Carrying long-term debt on a credit card can be expensive because the interest grows over time. If it is necessary to use the card, people with good credit may want to shop around for a zero percent interest card that offers a balance transfer. People who have already accumulated medical debt on a credit card should focus on strategies for paying it down. These strategies could include earning more money at a part-time job. Furthermore, since interest is calculated based on the average daily balance, it may help to make one payment earlier in the month and one later.

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William H. Lively, Jr

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

Phone: 903-920-0008
Phone: 903-593-3001
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