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This story Cancel Student Loans In Bankruptcy? You May Not Qualify Forbes July 16, 2020 originally appeared
https://www.forbes.com/sites/zackfriedman/2020/07/16/student-loans-bankr...
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Cancel Student Loans In Bankruptcy? You May Not Qualify
Zack Friedman
Can you discharge your student loans in bankruptcy? A new proposal says yes, but not everyone qualifies.
Here’s what you need to know.
Student Loans
Rep. Mary Gay Scanlon (D -PA) introduced new legislation today that would make it easier for you to discharge student loans in bankruptcy if you are struggling financially and have been impacted by Covid-19. Here’s the good news: the COVID-19 Student 5 Loan Relief Act of 2020 would apply to both private student loans and federal student loans, and be available to all Americans impacted by Covid-19.
Discharge student loans: the fine print
Now, here’s the fine print: you may not qualify to discharge your student loans in bankruptcy under this proposal. According to the bill, to qualify:
your income has been reduced due to the Covid-19 pandemic; or
the primary income earner in your family died; or
you have become permanently disabled
Most Popular In: Personal Finance
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New Stimulus Package May Be Introduced Next Week
Proposal: Discharge Student Loans For Those Harmed By Pandemic And Recession
Now, lets’ break down the first requirement based on the language on the bill. The legislation requires a reduction in income due to Covid-19. What does this mean? Here’s what the bill says. It’s not enough that your income simply declined. Specifically, to qualify to discharge your student loans in bankruptcy
If you make less than this pre-tax income...your income must decline by at least this percentage...
< $75,000 Income: at least 20% decline
$75,000 - $125,000 Income: at least 30% decline
$125,000+ Income: at least 40% decline
Plus, the relevant time period is “beginning January 21, 2020 and extending until 60 days after the duration of the Covid-19 emergency or the duration of the Covid-19 outbreak or as a result of the COVID-19 outbreak.” Even if you wouldn’t qualify under this specific proposal, you still may be able to discharge your student loans in bankruptcy through the normal course based on your financial situation. Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met.
Cancel student loan debt
This latest bankruptcy legislation is part of an ongoing effort to provide more student loan relief, particularly as as result of Covid-19. For example, Student Debt Crisis, a leading student loan advocacy not-profit, recently sent Sen. Elizabeth Warren (D-MA) a petition for student loan forgiveness with 1.2 million signatures. Warren, who proposed student loan forgiveness for 95% of Americans, has been a proponent of student loan forgiveness and student loan debt cancellation. Scanlon’s legislation would make it easier by amending Chapter 11 of the U.S. Bankruptcy Code, although the requirements to qualify may be challenging for some. Student loan forgiveness has been a hot topic in Congress, particularly in the wake of the Covid-19 pandemic. For example, former Vice President Joe Biden reiterated his support for student loan forgiveness and his support to discharge student loans in bankruptcy. Other members of Congress have proposed legislation to forgive student loans, although none have become law.
Will student loans be included in the new stimulus?
Maybe. It’s unlikely that this bill or a similar bill to discharge student loans in bankruptcy will be included in the new stimulus. The new stimulus package may be introduced next week. Currently, the focus includes second stimulus checks, state and local aid, unemployment benefits or a return-to-work bonus and liability protection due to Covid-19 for businesses. However, don’t expect student loan forgiveness to be included. However, Congress may extend student loan relief under the Cares Act, or Congress could allow the student loan relief to expire as planned on September 30, 2020. That said, student loans have not been the focus among Republicans (who control the Senate) among other high priority issues. There is bipartisan support to make student loans dischargeable in bankruptcy, but there may not be consensus to act until after the election in the next Congress.
This post appeared in the New York Times on 7/17/20
https://www.nytimes.com/2020/07/17/business/dealbook/bankruptcy-filings-...
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The Eye of the Bankruptcy Storm
Chesapeake Energy was among the companies to file for bankruptcy protection in recent weeks.Credit...Brett Carlsen/Reuters
July 17, 2020Updated 7:28 a.m. ET
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The pendulum swings back toward fear
As the pandemic persists, more and more companies have filed for bankruptcy protection, following in the footsteps of Hertz, J. Crew and Neiman Marcus. But financial restructuring advisers — the bankers and lawyers who help troubled companies repair their balance sheets or slog through Chapter 11 — say that they expect filings to accelerate. If anything, we’re now in the lull before the storm.
About 3,600 companies filed for Chapter 11 in the first half of 2020, more than any year since 2012, according to the American Bankruptcy Institute. The past few weeks have brought filings by the fracking pioneer Chesapeake Energy, the Japanese home goods company Muji USA and the retailer New York & Company.
Image
But cases dropped last month. Why? Advisers cited the federal government’s programs for stabilizing the economy and credit markets, as well as efforts by companies to bolster their cash by drawing down their credit lines and issuing new bonds. (Businesses worldwide have sold $2.1 trillion worth of bonds so far this year, up 50 percent from the year before.) Earlier-than-expected reopenings have bolstered some businesses’ performance, allowing them to bring in some sales — critical to servicing their debts.
Yet as coronavirus cases surge again, an uptick in filings may follow. The rise in infections brings the prospect of renewed lockdowns and shakes consumer confidence, testing companies’ abilities to survive another spell of little to no revenue. “We’re starting to see the pendulum swing back toward fear again,” William Hardie, a managing director in Houlihan Lokey’s financial restructuring group, told DealBook’s Michael de la Merced.
And what comes next could be ugly. Many companies that saved themselves by borrowing more money are now in a bind: They have mortgaged nearly all their available assets, leaving little wiggle room.
• Creditors are willing to give companies concessions on existing debt covenants — especially since they don’t want to recognize any of their loans as impaired, hurting their own balance sheets — but if borrowers need more money, they may find lenders are unwilling or unable to front the cash.
Where to expect the next wave: While retailers and energy companies have dominated the first wave, restructuring experts say the next round of filings could hit the travel industry hard, including airlines, hotels and firms that lease planes to carriers.
More companies will be taken over by lenders, who will convert their loans into equity. So far, advisers say, talks between debtors and creditors have been sanguine, with relatively few of the disagreements that often complicate Chapter 11 cases. “There’s no finger-pointing,” Mr. Hardie said. “Everyone realizes this is no one’s fault.”
ImageThe C.D.C. has extended a ban on cruise ships until Sept. 30.Credit...Alexandre Meneghini/Reuters
Deciding on whether or not you should file for bankruptcy is a tough call. Some may even tell you to declare bankruptcy only as a last resort. But before giving in to the stigma, consider all possible angles in approaching your financial issues.
The main reason why bankruptcy laws were even created was to provide debtors a chance at a fresh start. Unlike what most people think, bankruptcy is not a punishment for borrowers who were unable to handle their financial resources. In fact, the top reasons why bankruptcy declarations are considered by families is the loss of income and huge medical debt.
Factors Leading to A Bankruptcy Filing
If you find yourself in any of the scenarios described below, then you should think about filing for bankruptcy as one of your legal options.
- Sudden medical conditions. If you have an injury or health problem, it can be difficult or even impossible to perform any gainful activity. On top of that, you’ll have to worry about health expenses piling up due to your illness. If you file bankruptcy, you get a chance at discharging those medical bills as ordered by the bankruptcy judge.
- The threat of property foreclosure. The possibility of losing your home is scary. But if you consider filing Chapter 7 bankruptcy, you can temporarily stop foreclosure and even have unpaid mortgages discharged, or possibly keep your home permanently if you’re eligible for a Chapter 13 bankruptcy filing.
- Creditor harassment. If your lenders demand payments night and day and threaten to seize your most valued assets, then bankruptcy can give you the good night’s rest you wanted. How, you might ask? Through an “automatic stay”, which is an order issued by the bankruptcy court that requires all your creditors to stop collecting anything from you.
- Living on credit card payments. If you can afford food, medicine, clothing, and shelter only by maxing out your credit limit, or if you can only pay outstanding credit loans using another credit card, then declaring bankruptcy gives you a second chance with the possibility of wiping nonsecured credit card debts.
If you find yourself in any of the situations above, you’re a good candidate for a bankruptcy case. Before proceeding, ask yourself these questions: Is it possible to negotiate a reduction of the loan amount? Can I expect my financial status to improve anytime soon? Are there other sources of debt payments I haven’t considered? If you answered YES to most of these questions, then it might still be possible to take control of your situation. However, if your issues have been a major source of stress, then talking to a lawyer experienced in bankruptcy, such as those from Northwest Debt Relief Law Firm should be considered.
There are plenty of debt relief solutions to choose from, such as but not limited to filing bankruptcy, reaching out to an agency offering free credit counseling, considering debt consolidation or debt settlement, or researching debt management programs. Regardless of which direction you take, it is highly recommended to get advice from a legal representative who has worked with bankruptcy filings in the past.
How Northwest Debt Relief Law Firm Can Help
During a consultation with our bankruptcy lawyer, you will be guided in choosing the right type of bankruptcy to file, which are called Chapters. One popular option for personal bankruptcies is Chapter 7. This is intended for filers who are unable to pay loans due to a low income (defined as earning less than the median income in your State) and wipes out credit card debt, medical bills, lawsuits, lease obligations, and personal loans. For those with higher income, filing Chapter 7 can be done by passing a “means test” conducted by the court trustee through an examination of income sources and expenses.
If you do have a constant source of income, your lawyer may advise you to file a Chapter 13 bankruptcy, also called the “wage earner’s bankruptcy”. It gives you an opportunity to tweak the details of your current loan agreements and extend payments under a new repayment plan. If you are facing the possibility of foreclosure, it can also save your home. However, keep in mind that not all debts get discharged. Your student loan, unpaid child support or alimony, and taxes due will remain in your file.
Your bankruptcy attorney will also discuss with you what happens once your bankruptcy case is closed. This will cover your concerns about your credit score, credit report, future property purchases, making payments for non-exempt assets, and facing secured debtors. Though a bankruptcy option appears challenging, remember that its ultimate goal is to give you relief from your debts. Start your journey towards this goal by calling a law firm specializing in bankruptcy law such as the Northwest Debt Relief Law Firm. Schedule your free consultation with our bankruptcy attorneys and get a grip on your financial future.
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The post Am I A Good Candidate for Bankruptcy? appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.
Bankruptcy exemptions help debtors keep some of their property from being seized by the court. In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. If you are married, additional exemptions apply.
In bankruptcy filings, all non exempt assets are placed in a bankruptcy estate and managed by the court’s appointed trustee. Bankruptcy exemptions allow filers to keep a portion of their properties without having to think about paying off debts owed to lenders. Knowing which properties fall under bankruptcy protection depends on the filing chapter of the bankruptcy petition and the state where you filed your case.
You need to review state bankruptcy laws and check whether federal bankruptcy exemptions apply before filing bankruptcy. What is unique in Texas is that a filer may choose to apply either state or federal exemptions when they file for bankruptcy.
In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. In addition, for married couples, each may claim exemption for properties jointly owned, allowing them to double the exemption limit.
Conditions for Homestead Exemption
Under Texas exemption laws, an individual’s residence may be excluded from the bankruptcy estate if it is less than 10 acres and is situated in a city, town, or village, or if the total property area is less than 100 acres in the country. Under the same laws, families may apply for double the area limit, with homes measuring 200 acres or less being exempted.
A debtor may also choose to sell the home and liquidate his asset. In such a case, under the Texas Property Code, the exemption still applies within the first six months after it was sold.
Bankruptcy Exemptions for Motor Vehicles
Texas bankruptcy laws allow a filer to have the full value of a motor vehicle exempted from bankruptcy. Moreover, for individuals or families owning more than one vehicle, every licensed family member is entitled to have one vehicle listed for exemption.
If you have a family member owning a vehicle but has no license, you may still file for exemption as long as the vehicle is operated by a licensed third party..
Exempted Personal Properties for Individuals and Families
All assets and properties other than your real estate are considered part of your personal property.
Individuals without a family may have their personal properties exempted from the bankruptcy estate if the total asset value does not exceed $50,000. In contrast, for families, the head may file for a higher exemption limit of not more than $100,000.
Examples of personal properties which you may be filed for exemption are the following: pets, farm animals and livestock, clothing, food, home furnishings, household goods, family heirlooms, jewelries (as long as these does not make up more than 25% of exemptions), athletic or sport equipment, bicycles, firearms (not more than two), heath aids, religious books such as Bibles, and even burial plots.
A bankruptcy trustee can help you determine the value of your personal properties and help decide which can be filed for exemption.
Pensions, Retirement, and Health Savings Account Exemptions
Borrowers may also request to have their pensions and retirement accounts protected from creditors under the state bankruptcy law. Under the Texas Insurance Code, exempted accounts include the following:
- Retirement funds or accounts enjoying special tax exemptions under the U.S. Tax Code
- Retirement and pension benefits for district and county employees, municipal and state employees, elected officials, teachers, firefighters, police officers, and judges
- Survivors benefits for firefighters, law enforcement officers, and emergency medical employees
- Tax-deferred retirement benefits
- Life, health, accident, or annuity benefits
- Uniform group benefit insurance for Texas employees
- Group insurance for Texas public school employees
- Texas state college or university employee benefits.
Non Exempt Debts
Although claiming exemptions can ease your hardship and help manage your remaining finances, take note that under the Bankruptcy Code, student loans, child support owed, or unpaid alimony will not be discharged by the bankruptcy court. You still have to pay back your debt to the creditor.
Aside from going through the non-exhaustive list of exemptions above, determining which properties are exempted and which are non-exempt under Texas laws may be done by bankruptcy trustees who are appointed by the country to oversee estates. It may also be done by bankruptcy attorneys hired to litigate a case. Your lawyer will also explain to you all applicable Texas laws and provide you with much needed credit counseling.
If you need help understanding exemptions and bankruptcy filing, you may consult with a Texas bankruptcy attorney Allmand Law Firm, PLLC. Our lawyers are experienced to provide legal counsel in bankruptcy cases and will help protect your assets by maximizing the exemption laws.
Contact our law firm here and schedule your free initial consultation.
The post Bankruptcy Exemptions in Texas appeared first on Allmand Law Firm, PLLC.
Bankruptcy exemptions help debtors keep some of their property from being seized by the court. In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. If you are married, additional exemptions apply.
In bankruptcy filings, all non exempt assets are placed in a bankruptcy estate and managed by the court’s appointed trustee. Bankruptcy exemptions allow filers to keep a portion of their properties without having to think about paying off debts owed to lenders. Knowing which properties fall under bankruptcy protection depends on the filing chapter of the bankruptcy petition and the state where you filed your case.
You need to review state bankruptcy laws and check whether federal bankruptcy exemptions apply before filing bankruptcy. What is unique in Texas is that a filer may choose to apply either state or federal exemptions when they file for bankruptcy.
In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. In addition, for married couples, each may claim exemption for properties jointly owned, allowing them to double the exemption limit.
Conditions for Homestead Exemption
Under Texas exemption laws, an individual’s residence may be excluded from the bankruptcy estate if it is less than 10 acres and is situated in a city, town, or village, or if the total property area is less than 100 acres in the country. Under the same laws, families may apply for double the area limit, with homes measuring 200 acres or less being exempted.
A debtor may also choose to sell the home and liquidate his asset. In such a case, under the Texas Property Code, the exemption still applies within the first six months after it was sold.
Bankruptcy Exemptions for Motor Vehicles
Texas bankruptcy laws allow a filer to have the full value of a motor vehicle exempted from bankruptcy. Moreover, for individuals or families owning more than one vehicle, every licensed family member is entitled to have one vehicle listed for exemption.
If you have a family member owning a vehicle but has no license, you may still file for exemption as long as the vehicle is operated by a licensed third party..
Exempted Personal Properties for Individuals and Families
All assets and properties other than your real estate are considered part of your personal property.
Individuals without a family may have their personal properties exempted from the bankruptcy estate if the total asset value does not exceed $50,000. In contrast, for families, the head may file for a higher exemption limit of not more than $100,000.
Examples of personal properties which you may be filed for exemption are the following: pets, farm animals and livestock, clothing, food, home furnishings, household goods, family heirlooms, jewelries (as long as these does not make up more than 25% of exemptions), athletic or sport equipment, bicycles, firearms (not more than two), heath aids, religious books such as Bibles, and even burial plots.
A bankruptcy trustee can help you determine the value of your personal properties and help decide which can be filed for exemption.
Pensions, Retirement, and Health Savings Account Exemptions
Borrowers may also request to have their pensions and retirement accounts protected from creditors under the state bankruptcy law. Under the Texas Insurance Code, exempted accounts include the following:
- Retirement funds or accounts enjoying special tax exemptions under the U.S. Tax Code
- Retirement and pension benefits for district and county employees, municipal and state employees, elected officials, teachers, firefighters, police officers, and judges
- Survivors benefits for firefighters, law enforcement officers, and emergency medical employees
- Tax-deferred retirement benefits
- Life, health, accident, or annuity benefits
- Uniform group benefit insurance for Texas employees
- Group insurance for Texas public school employees
- Texas state college or university employee benefits.
Non Exempt Debts
Although claiming exemptions can ease your hardship and help manage your remaining finances, take note that under the Bankruptcy Code, student loans, child support owed, or unpaid alimony will not be discharged by the bankruptcy court. You still have to pay back your debt to the creditor.
Aside from going through the non-exhaustive list of exemptions above, determining which properties are exempted and which are non-exempt under Texas laws may be done by bankruptcy trustees who are appointed by the country to oversee estates. It may also be done by bankruptcy attorneys hired to litigate a case. Your lawyer will also explain to you all applicable Texas laws and provide you with much needed credit counseling.
If you need help understanding exemptions and bankruptcy filing, you may consult with a Texas bankruptcy attorney Allmand Law Firm, PLLC. Our lawyers are experienced to provide legal counsel in bankruptcy cases and will help protect your assets by maximizing the exemption laws.
Contact our law firm here and schedule your free initial consultation.
The post Bankruptcy Exemptions in Texas appeared first on Allmand Law Firm, PLLC.
Bankruptcy exemptions help debtors keep some of their property from being seized by the court. In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. If you are married, additional exemptions apply.
In bankruptcy filings, all non exempt assets are placed in a bankruptcy estate and managed by the court’s appointed trustee. Bankruptcy exemptions allow filers to keep a portion of their properties without having to think about paying off debts owed to lenders. Knowing which properties fall under bankruptcy protection depends on the filing chapter of the bankruptcy petition and the state where you filed your case.
You need to review state bankruptcy laws and check whether federal bankruptcy exemptions apply before filing bankruptcy. What is unique in Texas is that a filer may choose to apply either state or federal exemptions when they file for bankruptcy.
In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. In addition, for married couples, each may claim exemption for properties jointly owned, allowing them to double the exemption limit.
Conditions for Homestead Exemption
Under Texas exemption laws, an individual’s residence may be excluded from the bankruptcy estate if it is less than 10 acres and is situated in a city, town, or village, or if the total property area is less than 100 acres in the country. Under the same laws, families may apply for double the area limit, with homes measuring 200 acres or less being exempted.
A debtor may also choose to sell the home and liquidate his asset. In such a case, under the Texas Property Code, the exemption still applies within the first six months after it was sold.
Bankruptcy Exemptions for Motor Vehicles
Texas bankruptcy laws allow a filer to have the full value of a motor vehicle exempted from bankruptcy. Moreover, for individuals or families owning more than one vehicle, every licensed family member is entitled to have one vehicle listed for exemption.
If you have a family member owning a vehicle but has no license, you may still file for exemption as long as the vehicle is operated by a licensed third party..
Exempted Personal Properties for Individuals and Families
All assets and properties other than your real estate are considered part of your personal property.
Individuals without a family may have their personal properties exempted from the bankruptcy estate if the total asset value does not exceed $50,000. In contrast, for families, the head may file for a higher exemption limit of not more than $100,000.
Examples of personal properties which you may be filed for exemption are the following: pets, farm animals and livestock, clothing, food, home furnishings, household goods, family heirlooms, jewelries (as long as these does not make up more than 25% of exemptions), athletic or sport equipment, bicycles, firearms (not more than two), heath aids, religious books such as Bibles, and even burial plots.
A bankruptcy trustee can help you determine the value of your personal properties and help decide which can be filed for exemption.
Pensions, Retirement, and Health Savings Account Exemptions
Borrowers may also request to have their pensions and retirement accounts protected from creditors under the state bankruptcy law. Under the Texas Insurance Code, exempted accounts include the following:
- Retirement funds or accounts enjoying special tax exemptions under the U.S. Tax Code
- Retirement and pension benefits for district and county employees, municipal and state employees, elected officials, teachers, firefighters, police officers, and judges
- Survivors benefits for firefighters, law enforcement officers, and emergency medical employees
- Tax-deferred retirement benefits
- Life, health, accident, or annuity benefits
- Uniform group benefit insurance for Texas employees
- Group insurance for Texas public school employees
- Texas state college or university employee benefits.
Non Exempt Debts
Although claiming exemptions can ease your hardship and help manage your remaining finances, take note that under the Bankruptcy Code, student loans, child support owed, or unpaid alimony will not be discharged by the bankruptcy court. You still have to pay back your debt to the creditor.
Aside from going through the non-exhaustive list of exemptions above, determining which properties are exempted and which are non-exempt under Texas laws may be done by bankruptcy trustees who are appointed by the country to oversee estates. It may also be done by bankruptcy attorneys hired to litigate a case. Your lawyer will also explain to you all applicable Texas laws and provide you with much needed credit counseling.
If you need help understanding exemptions and bankruptcy filing, you may consult with a Texas bankruptcy attorney Allmand Law Firm, PLLC. Our lawyers are experienced to provide legal counsel in bankruptcy cases and will help protect your assets by maximizing the exemption laws.
Contact our law firm here and schedule your free initial consultation.
The post Bankruptcy Exemptions in Texas appeared first on Allmand Law Firm, PLLC.
Bankruptcy exemptions help debtors keep some of their property from being seized by the court. In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. If you are married, additional exemptions apply.
In bankruptcy filings, all non exempt assets are placed in a bankruptcy estate and managed by the court’s appointed trustee. Bankruptcy exemptions allow filers to keep a portion of their properties without having to think about paying off debts owed to lenders. Knowing which properties fall under bankruptcy protection depends on the filing chapter of the bankruptcy petition and the state where you filed your case.
You need to review state bankruptcy laws and check whether federal bankruptcy exemptions apply before filing bankruptcy. What is unique in Texas is that a filer may choose to apply either state or federal exemptions when they file for bankruptcy.
In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. In addition, for married couples, each may claim exemption for properties jointly owned, allowing them to double the exemption limit.
Conditions for Homestead Exemption
Under Texas exemption laws, an individual’s residence may be excluded from the bankruptcy estate if it is less than 10 acres and is situated in a city, town, or village, or if the total property area is less than 100 acres in the country. Under the same laws, families may apply for double the area limit, with homes measuring 200 acres or less being exempted.
A debtor may also choose to sell the home and liquidate his asset. In such a case, under the Texas Property Code, the exemption still applies within the first six months after it was sold.
Bankruptcy Exemptions for Motor Vehicles
Texas bankruptcy laws allow a filer to have the full value of a motor vehicle exempted from bankruptcy. Moreover, for individuals or families owning more than one vehicle, every licensed family member is entitled to have one vehicle listed for exemption.
If you have a family member owning a vehicle but has no license, you may still file for exemption as long as the vehicle is operated by a licensed third party..
Exempted Personal Properties for Individuals and Families
All assets and properties other than your real estate are considered part of your personal property.
Individuals without a family may have their personal properties exempted from the bankruptcy estate if the total asset value does not exceed $50,000. In contrast, for families, the head may file for a higher exemption limit of not more than $100,000.
Examples of personal properties which you may be filed for exemption are the following: pets, farm animals and livestock, clothing, food, home furnishings, household goods, family heirlooms, jewelries (as long as these does not make up more than 25% of exemptions), athletic or sport equipment, bicycles, firearms (not more than two), heath aids, religious books such as Bibles, and even burial plots.
A bankruptcy trustee can help you determine the value of your personal properties and help decide which can be filed for exemption.
Pensions, Retirement, and Health Savings Account Exemptions
Borrowers may also request to have their pensions and retirement accounts protected from creditors under the state bankruptcy law. Under the Texas Insurance Code, exempted accounts include the following:
- Retirement funds or accounts enjoying special tax exemptions under the U.S. Tax Code
- Retirement and pension benefits for district and county employees, municipal and state employees, elected officials, teachers, firefighters, police officers, and judges
- Survivors benefits for firefighters, law enforcement officers, and emergency medical employees
- Tax-deferred retirement benefits
- Life, health, accident, or annuity benefits
- Uniform group benefit insurance for Texas employees
- Group insurance for Texas public school employees
- Texas state college or university employee benefits.
Non Exempt Debts
Although claiming exemptions can ease your hardship and help manage your remaining finances, take note that under the Bankruptcy Code, student loans, child support owed, or unpaid alimony will not be discharged by the bankruptcy court. You still have to pay back your debt to the creditor.
Aside from going through the non-exhaustive list of exemptions above, determining which properties are exempted and which are non-exempt under Texas laws may be done by bankruptcy trustees who are appointed by the country to oversee estates. It may also be done by bankruptcy attorneys hired to litigate a case. Your lawyer will also explain to you all applicable Texas laws and provide you with much needed credit counseling.
If you need help understanding exemptions and bankruptcy filing, you may consult with a Texas bankruptcy attorney Allmand Law Firm, PLLC. Our lawyers are experienced to provide legal counsel in bankruptcy cases and will help protect your assets by maximizing the exemption laws.
Contact our law firm here and schedule your free initial consultation.
The post Bankruptcy Exemptions in Texas appeared first on Allmand Law Firm, PLLC.
More owners are permanently shutting their doors after new lockdown orders, realizing that there may be no end in sight to the crisis.
Gabriel Gordon shuttered his popular barbecue restaurant in California after the state saw a resurgence of coronavirus cases and imposed new restrictions.Credit...Horatio Baltz for The New York Times
By Emily Flitter
July 13, 2020
On the last Friday of June, after Gov. Greg Abbott of Texas said that bars across the state would have to shut down a second time because coronavirus cases were skyrocketing, Mick Larkin decided he had had enough.
No matter that Mr. Larkin, an owner of a karaoke club in Wichita Falls, Texas, had just paid $1,000 for perishable goods and protective equipment in anticipation of the weekend rush. No matter that the frozen margarita machine was full, that 175 plastic syringes with booze-infused Jell-O were in place, or that there were masks for staff members and hand sanitizer for guests.
That day, June 26, Mr. Larkin and his partner dumped what they had just bought into the trash and decided to close their club, Krank It Karaoke, for good.
“We did everything we were supposed to do,” Mr. Larkin said. “When he shut us down again, and after I put out all that money to meet their rules, I just said, ‘I can’t keep doing this.’”
It was harrowing enough for small businesses — the bars, dental care practices, small law firms, day care centers and other storefronts that dot the streets and corners of every American town and city — to have to shut down after state officials imposed lockdowns in March to contain the pandemic.
But the resurgence of the virus, especially in states such as Texas, Florida and California that had begun to reopen, has introduced a far darker reality for many small businesses: Their temporary closures might become permanent.
Nearly 66,000 businesses have folded since March 1, according to data from Yelp, which provides a platform for local businesses to advertise their services and has been tracking announcements of closings posted on its site. From June 15 to June 29, the most recent period for which data is available, businesses were closing permanently at a higher rate than in the previous three months, Yelp found. During the same period, permanent closures increased by 3 percent overall, accounting for roughly 14 percent of total closures since March.
Researchers at Harvard believe the rates of business closures are likely to be even higher. They estimated that nearly 110,000 small businesses across the country had decided to shut down permanently between early March and early May, based on data collected in weekly surveys by Alignable, a social media network for small-business owners.
Christopher Stanton, an associate professor at Harvard Business School who was one of the researchers, said it was difficult to accurately gauge how many small businesses were closing because, once they shut their doors for good, the owners were hard to reach. He added that it could take up to a year before government officials knew the true toll the pandemic was taking on small businesses.
At the moment, 39 states continue to record growing numbers of new cases daily.
It is not clear how many of the businesses Yelp is tracking count as “small” — defined by the Small Business Administration as those with 500 or fewer employees. But the company found that, among the tracked businesses — which include restaurants, retailers and other independent, consumer-facing operations — retail businesses, led by beauty supply stores, have been closing at the highest rate since the pandemic began. Restaurants are the next hardest-hit group.
ImageNick Muscari decided to permanently close Nick’s Sports Grill and Lounge in Lubbock after Texas’s second round of virus closures.Credit...Dylan Cole for The New York Times
Small businesses account for 44 percent of all U.S. economic activity, according to the S.B.A., and closures on such an immense scale could devastate the country’s economic growth. If they were grouped together, small businesses would be among the country’s biggest employers, said Satyam Khanna, a resident fellow at the Institute for Corporate Governance and Finance at New York University School of Law who has written about the effects of the pandemic on small businesses.
So when small businesses close en masse, an entire sector of the economy suffers, Mr. Khanna said. There is lower cash flow, higher debt and more unemployment. “That leads to a big drag on the eventual recovery,” he said. “Because they are such an important source of jobs, losing them the way we are losing them now is going to make things far worse than they otherwise need to be.”
Because small businesses depend heavily on foot traffic and operate on thin margins, they are especially vulnerable to the ripple effects of a widespread shutdown.
For nearly two decades, Rich Tokheim and his wife sold sports memorabilia — hats, T-shirts, coffee mugs and other trinkets — to fans in Omaha at their store, The Dugout. Since 2011, The Dugout has occupied prime real estate across the street from the city’s 24,000-seat baseball stadium, which usually hosts the College World Series each spring.
The 2020 World Series was canceled in March. In the weeks that came after, other sporting events were scrapped — starting with college sports and extending to professional leagues that have struggled to relaunch their activities.
Mr. Tokheim, 58, watched his business fall off with growing unease, but it was only after a friendly chat with a retired college athletic director in May that the gravity of his situation hit home. He was already worried about the state of the virus in Nebraska, and whether there was enough tracking. Then the athletic director predicted that if college football was canceled for the year, it would be the end of Division I sports as a whole.
“That really put me in overdrive,” Mr. Tokheim said. He negotiated an early exit on his store lease and announced a clearance sale at the store. The Dugout closed for good on June 30.
The government’s Paycheck Protection Program, rolled out in April and administered by the S.B.A., earmarked $660 billion of aid for small businesses, but stipulated that a loan would be forgiven only if most of it was used to pay employee wages for eight weeks. The rules were later relaxed, but in a sign of how many small-business owners did not feel confident that they would be on steady ground by the time repayment was due, roughly $130 billion of aid money remained untapped when the program ended in June.
Even for those who took a P.P.P. loan, survival is no guarantee. Nick Muscari, a 38-year-old restaurateur in Lubbock, Texas, received one. His restaurant, Nick’s Sports Grill and Lounge, had been the culmination of Mr. Muscari’s life’s work — his years of toil as a waiter, pizza cook and manager at restaurants and bars beginning in his teenage years. Three years ago, he bought out the two partners who helped him start the restaurant in 2010. He considered it a crowning achievement, but to do so, he had to borrow money. He still owes a bank $80,000.
ImageMr. Muscari still owes a bank $80,000 on his now-shuttered restaurant.Credit...Dylan Cole for The New York Times
ImageNick’s Sports Grill and Lounge is now up for rent.Credit...Dylan Cole for The New York Times
Image“We never had anybody catch the virus in our establishment,” Mr. Muscari said.Credit...Dylan Cole for The New York Times
Mr. Muscari tried to ride out the spring lockdown that temporarily shuttered his restaurant with the help of the P.P.P. money. But when the state’s second closure order took effect on June 26, he decided to close for good.
“It had been in the back of our minds, just like, you know, if this happens again, can we make it?” Mr. Muscari said. “We were following all the rules and people were spread out. We never had anybody catch the virus in our establishment."
Mr. Muscari, with the business closed and its 30 employees jobless, has nothing left but his house and his car. He also expects his landlord to try to sue him for the eight years’ worth of rent he is contracted to pay on his defunct restaurant’s space.
Many small businesses are also finding it onerous keep up with constantly changing local guidelines, while others are deciding that no matter what their local officials say, it just is not safe to keep going. Gabriel Gordon, the owner of a tiny but popular barbecue restaurant in Seal Beach, Calif., decided to close permanently after studying the restaurant’s layout. He had determined that the kitchen would never be safe for multiple staff members to occupy at once while the virus was still active in the area.
“It’s essentially two hallways that are 11 feet wide,” Mr. Gordon said, describing the shape of the restaurant, Beachwood BBQ. “There are food trucks that are larger than my kitchen.”
Whatever the specific reasons may be for each closure, Justin Norman, Yelp’s vice president of data science, said that the federal government should offer small businesses more help. Mr. Norman said Yelp was concerned about the effects of small-business closures, especially those owned by people of color, on society. Yelp, however, also has a financial interest in maintaining a robust small-business environment, because it relies heavily on advertising by businesses on its platform.
“The time is right now to inject more capital or we may lose them forever,” Mr. Norman said. “It’s going to make our economies worse, it’s going to make our communities worse.”
ONE WAY TO REBUILD YOUR CREDIT
CREDIT BUILDER LOAN COULD HELP CONSUMERS BUILD OR REBUILD THEIR CREDIT
(reprint from CFPB) July 13, 2020, the Consumer Financial Protection Bureau (Bureau) released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one, and could help improve the credit scores of those with no current outstanding debt. The Bureau issued “Targeting Credit Builder Loans: Insights from a Credit Builder Loan Evaluation” and an accompanying practitioner’s guide to broaden insight for community-based organizations and financial institutions working toward expanding financial inclusion.
The report, being released during Consumer Financial Protection Week, July 13-17, examines 1,531 credit union members who were offered a financial institution’s credit builder loan (CBL). Highlights:
- For participants without an existing loan, opening a CBL increased their likelihood of having a credit score by 24%. Almost all participants with existing debt already had a credit score, so the CBL had minimal effect on their likelihood of having score.
- Participants without existing debt saw their credit scores increase by 60 points more than participants with existing debt.
- The CBL was associated with an average increase in participants’ savings balances of $253.
Bureau research has found that approximately 26 million U.S. adults, one in 10, lack a credit record and are “credit invisible.” Another 19 million Americans have a credit record but no score because their history is too thin or out-of-date. Without a credit score consumers may face challenges to accessing credit or qualifying for lower-interest rate loans and credit products.
The terms of credit builder loans (CBL) vary across financial institutions, but the central feature is the requirement that the borrower makes payments before receiving funds – opposite of more traditional loans. When a borrower opens a CBL, the lender moves its own funds, generally $300 to $1,000 into a locked escrow account. The borrower makes payments, including interest and fees, in installments typically over a period of 6 to 24 months. These payments appear on the borrower’s credit report.
Other findings of the study, of which enrollment took place from September 2014 through February 2015, indicate that the CBL appeared to cause a decrease in scores for participants with existing debt; and on average, those with existing loans saw their scores decrease slightly, suggesting that these consumers had difficulty incorporating CBL payments into existing payment obligations. The report suggests that financial counseling could be provided, either before a consumer opens a CBL or while they are making CBL repayments.
About 82 percent of participants entered the study with a credit score. Among participants who entered the study with a score, the average score was a subprime 560; nationally, the average score was just under 700 at the time of the study. Sixty-two percent of participants had annual household income under $30,000. The majority of participants were female, nearly 90 percent were African American, the average age was 43, and about one in four had a college degree.
The credit builder loan study can be found here: https://files.consumerfinance.gov/f/documents/cfpb_targeting-credit-builder-loans_report_2020-07.pdf
The practitioner’s report can be found here: https://files.consumerfinance.gov/f/documents/cfpb_targeting-credit-builder-loans_practitioner_guide_2020-07.pdf
Research on credit builder loans, can be found here: https://www.consumerfinance.gov/data-research/research-reports/targeting-credit-builder-loans/
MUSINGS FROM DIANE:
Most folks in the United States believe their lives are controlled by their credit report. For the most part, they are correct. The ability to buy a home, a vehicle, lease an apartment or pay lower insurance is dictated by their credit report. The proper use of credit was never taught in school, which meant it was up to our family to teach us. I never heard the word credit from my parents, how about you? Instead, we learned from life, each making our own decisions – some good and some bad.
My only warning – like with medical advice, beware of the “quick fixes”.
How Can I Help You?
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I had an old debt surprise me the other day by way of a Summons and Diane was kind enough to give me some solid advice. She is very knowledgeable and I highly recommend her if your are looking for any legal council. Thanks again Diane I took your advise and have that old monkey off my back now!
L.M.
I took your advise and have that old monkey off my back now!
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