Bankruptcy is a debt relief process that enables consumers with insurmountable debt
loads and financial struggles to gain control of their economic health.
Achieving this goal and obtaining a brighter financial future will depend
on the Chapter of bankruptcy filed under. For example:
Chapter 7 bankruptcy involves the liquidation of non-exempt assets to pay at least some percentage
of debt owed to existing creditors in order of priority. Because many
Chapter 7 cases are no-asset cases, some creditors may not receive any
payment at all prior to discharge.
Chapter 13 bankruptcy allows individuals with sufficient income to restructure and consolidate
debt into a repayment plan over the course of three to five years, during
which they will make a single payment to a bankruptcy trustee. This payment
will then be dispersed to creditors based on priority. At the end of a
repayment plan, remaining debt on unsecured debts, such as credit card
debt, will be discharged.
In both Chapter 7 and Chapter 13 bankruptcy cases, money for unpaid debts
does come from somewhere – either a liquidation of assets or available
disposable income. Because there are other fees and expenses associated
with filing bankruptcy – including filing and attorney fees and
credit counseling or financial management courses – we often hear
concerns as to where debtors can obtain the funds necessary to address
these costs and other financial obligations. By closely reviewing our
clients’ unique situations, our Dallas bankruptcy attorneys at Allmand
Law Firm, PLLC can help them explore ways to free up finances when necessary.
Some of these options may include:
- Tax refunds received prior to a bankruptcy filing can be used strategically
and beneficially without introducing new legal complications. By waiting
to spend a tax refund, it may be considered as part of your bankruptcy
estate, which can be used to satisfy creditors. Refunds can also be used
with guidance from an experienced attorney who can help you obtain exemptions,
used the refund toward filing or attorney fees, and may necessary payments
toward necessities and utilities.
Credit card payments, or the money you would have paid toward new credit
card debt, can also be used wisely prior to or during bankruptcy. If you
plan on filing, it is best to
stop using your credit cards so that you do not create new debt, or subject yourself to scrutiny for
racking up debt with hopes of it being discharged once a bankruptcy is
finalized. By limiting credit card use before filing, you can free up
necessary funds and later benefit from the discharge of debts.
- Consumer protection actions may also allow consumers to secure additional
funds when their rights have been violated by creditors who failed to
abide by the Fair Debt Collection Practices Act. Under the FDCPA, creditors
are prohibited from using a number of tactics when attempting to collect
from consumers who are behind on payments, including excessive calls and
other forms of harassment. When successful, these claims can allow consumers
to obtain as much as $1,000 when creditors harass them, as well as other
damages and attorney fees.
- Managing expenses may be easier said than done, but when you are considering
bankruptcy, every dollar saved can make the difference. Take a look at
your financial situation, even with the help of an attorney, to see where
you can cut costs and save money that can be used toward your bankruptcy
and other necessary expenses. You might find that saving here and there
can quickly add up and provide the funds you need. Taking a serious approach
to budgeting and spending can also prove beneficial when during and after
your bankruptcy case as you begin to rebuild your credit and gain control
over your finances.
Aside from these options, some individuals also have options of seeking
low-cost legal services, provided that they meet qualifying criteria,
or ask friends and family for assistance if needed. Ultimately, the best
thing you can do when considering bankruptcy and how you can initiate
and navigate the process is to work with experienced attorneys like those
at Allmand Law Firm, PLLC.
Led by Board Certified Bankruptcy Specialist Reed Allmand (Texas Board
of Legal Specialization), our legal team can help you learn more about
paying for bankruptcy and how you can benefit from the automatic stay
and debt discharge. For a FREE financial empowerment session,
contact us today.