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How to Improve Your Life After Bankruptcy in Texas
Declaring bankruptcy gives you a chance to start over financially. However, it can also bring money struggles as you reestablish credit and financial health. Although bankruptcy comes with legal limits, with the right help from a Texas lawyer, your life after filing can actually get better in the long run.
Review the Impact on Your Credit
Understand that bankruptcy devastates your credit score initially. However, well-managed credit after bankruptcy rebounds quicker than many realize. Generally, a Chapter 7 bankruptcy remains on your credit report for ten years. However, credit scoring models differentiate older bankruptcies from new ones; for example, a 3-year-old Chapter 7 hurts much less than a recent filing. Checking your actual credit reports reveals what potential lenders view. Monitoring progress monthly shows how each successful payment and healthy financial choice improves your access to new credit.
What Medical Bills Can You Get Rid of With Bankruptcy?
Filing for bankruptcy can provide much-needed relief if you are overwhelmed by medical debt. Under Texas bankruptcy law, most types of medical debt can potentially be discharged through bankruptcy. However, you will want to understand which medical bills may still remain your responsibility after bankruptcy. A Texas lawyer can help you determine how different medical debts may be treated during bankruptcy.
Medical Debt from Doctors, Clinics, and Hospitals
Most medical debt owed directly to healthcare providers like hospitals, doctors’ offices, and medical clinics is unsecured under Texas law. Unsecured medical debts for treatment you have already received can usually be discharged entirely through Chapter 7 or Chapter 13 bankruptcy. This includes bills from:
Protecting Your Retirement Accounts During Bankruptcy
Filing for bankruptcy can be a difficult decision. Retirement accounts represent safety nets that you have spent years building for your future well-being. Luckily, under Texas and federal bankruptcy laws, certain retirement funds are exempted. A Texas lawyer can help determine how you may or may not be impacted and what types of retirement accounts may be protected.
401(k) Plans and Other Workplace Retirement Accounts
401(k), 403(b), 457 plans, and other employer-sponsored retirement plans are fully exempt under Texas law. This means you can keep your entire 401(k) balance even if you file for Chapter 7 bankruptcy. These protections also apply to other workplace plans like pensions.
IRAs
Texas exempts IRAs from creditor claims in bankruptcy up to $100,000 per person. This applies to both Roth and traditional IRAs. If your IRA balance exceeds $100,000, the amount over this limit may need to be turned over to pay creditors.
What is Considered Creditor Harassment?
Dealing with debt collectors and bankruptcy can be stressful. However, creditors and collectors still have to follow fair debt collection rules. It is important that you know you have rights and what to do when a debt collector crosses the line. A Texas lawyer can help you determine if what you are dealing with is harassment and figure out the next steps.
Repeated Unwanted Calls
Creditors may call you to try collecting debts. However, the law limits how often they can call. Specifically, debt collectors may not place repeated harassing calls intending to abuse or harass.
Signs of potential phone harassment include:
- Calling multiple times per day, even after requesting they stop
- Calling early in the morning or late at night
- Threatening to call your friends, family, or employer about the debt
If you request no further calls in writing and the collector keeps contacting you, that violates regulations. In Texas, you can sue for damages if the harassment continues after receiving written confirmation to cease communications.
Is a Short Sale Ideal for Everyone Facing Foreclosure?
Facing foreclosure can be an incredibly stressful and challenging situation. As a homeowner, you are likely exploring any and all options to avoid foreclosure and save your home. One route some homeowners consider is a short sale. But is this the best option for every homeowner in danger of foreclosure? A Texas lawyer can help you figure out if it is the most viable option for your circumstances.
What is a Short Sale?
A short sale enables homeowners to sell their property and repay their mortgage loan at the current appraised value, even if they owe more on their mortgage than their home is worth. This avoids a foreclosure while relinquishing the property. With a short sale, the lender agrees to discount a portion of the loan balance since the sale proceeds will not cover the amount owed. This forgives the remaining mortgage debt.
Who Owns Your Car When You File Bankruptcy in Texas?
When facing financial hardship, many people consider filing for bankruptcy to eliminate overwhelming debts and get a fresh start. However, this raises an important question regarding valuable assets like cars and motorcycles. For example, who owns the vehicle if you file for bankruptcy? A Texas bankruptcy lawyer can help break down the complex legal ownership rights to your car when navigating the steps.
What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
To understand vehicle ownership in bankruptcy, you must first comprehend the contrast between the two most common bankruptcy filings, Chapters 7 and 13. Chapter 7 bankruptcy involves liquidating your non-exempt assets to eliminate all eligible debt. This provides a quick discharge, but assets may be surrendered to creditors. Conversely, Chapter 13 bankruptcy proposes a 3-5-year debt repayment plan to repay creditors with future earnings over time.
The Automatic Stay Explained
As soon as a bankruptcy petition is filed, the automatic stay immediately goes into effect to halt most collection activities and allow the debtor to organize their finances. The automatic stay is an injunction imposed against certain creditors who want to start or continue taking action against a debtor or the debtor’s property. It is important to note that in some situations, there may be no automatic stay at all, or there may be only an automatic stay if the debtor obtains a court order that imposes the automatic stay. A Texas bankruptcy lawyer can help you figure this out and what you may experience specifically for your case.
What Exactly Does the Automatic Stay Do?
An automatic stay presses pause. It freezes any efforts by creditors and debt collectors to collect on debts that came due before the bankruptcy was filed. They cannot file lawsuits, garnish wages, repossess cars or homes, shut off utilities, send demand letters, make collection calls, or take any other steps to enforce, collect, or create liens against debts owed before filing. The purpose is to bring everything to a screeching halt so that debtors have some breathing room under bankruptcy court protection to get their affairs in order.
Can Your Wages Be Garnished for Student Loans in Texas?
If you default on your federal or private student loans, you may wonder if your wages can be garnished to pay back the debt. Unfortunately, the answer is yes—your wages can be taken involuntarily under certain circumstances to satisfy unpaid student loans. A Texas bankruptcy lawyer can help you understand what can legally happen in your situation.
When Wage Garnishment Is Allowed for Federal Student Loans
The federal government can seize your assets, including up to 15% of your disposable pay, to repay the loan if you default on your student loans. This applies to federal Direct Loans and FFEL Program loans held by the Department of Education. The wage garnishment process usually begins only after you have become seriously delinquent on your loan and have ignored requests for voluntary repayment. Before garnishing wages, the Department of Education will notify you of its intent to initiate proceedings.
Can You Have a Good Credit Score After Bankruptcy?
Filing for bankruptcy can seem like a last resort when faced with a consistently growing debt pile. It is understandable to worry about the long-term impacts on your financial life. However, bankruptcy does not have to ruin your credit score forever. With some strategic steps, you can rebuild your credit and improve your score after bankruptcy. A Texas bankruptcy lawyer can help point you in the right direction and help you properly go through the bankruptcy process.
The Bankruptcy Process and Your Credit
When you file for Chapter 7 or Chapter 13 bankruptcy, the court discharges some or all of your eligible debt. However, the bankruptcy remains on your credit report for 7-10 years, depending on the chapter you filed. This can cause an immediate drop in your credit score.
The good news is credit scoring models, and lenders understand that bankruptcy does not necessarily define your commitment to paying off debt. You can gradually rebuild your score with consistent, responsible credit behaviors in the months and years after your bankruptcy discharge.
What Rights Do You Have During a Foreclosure?
Going through a foreclosure can be an incredibly stressful and uncertain time. As a homeowner in Texas facing foreclosure, you still have certain rights that you should understand to best protect yourself during the process. Awareness of your rights can help you make informed decisions about the next steps. A Texas home foreclosure lawyer can point you in the right direction.
You Have the Right to Receive Notices
Lenders and mortgage servicers in Texas must provide homeowners with notices at specific points during the foreclosure timeline. These required notices include:
- Notice of Default - Sent when you have missed or are late on mortgage payments, giving you at least 20 days to become current on payments before further foreclosure proceedings.
- Notice of Acceleration - Sent if you do not become current on payments in the allotted timeframe, indicating that the mortgage holder may accelerate the mortgage and require immediate payment of the outstanding loan balance.
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