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Busting 3 Bankruptcy Myths

bankruptcy mythsOne of the most frustrating things about bankruptcy is that it is so misunderstood. You do not really care much about it until you are in a dire situation and need it – and then there is so much myth and misinformation, it becomes an incredibly daunting task to decide how you will proceed.

So today, we’re here to bust a few of the most common, enduring myths about bankruptcy. As always, if you are in a situation where you do not think there is any other option, please call us at 214-760-7777 – we are happy to walk you through all of your options.

Myth #1: After bankruptcy, you will have no credit for 7 to 10 years

There is no truth to the bankruptcy myth that you have to suffer through seven years with bad credit after filing bankruptcy. Bankruptcy does show on your credit report for 10 years, but even so, you can regain good credit in as little as two to three years. Our clients often have purchased cars and even qualified for mortgages only two to three years after bankruptcy. (more…)

By |August 24th, 2021|Bankruptcy Myths|Comments Off on Busting 3 Bankruptcy Myths

Considering bankruptcy? Follow these 4 tips

4 bankruptcy tipsMost of our clients come to us, struggling with massive debts that have spun out of control. One unforeseen bump in the road (a sudden job loss, an accident, a medical condition) is all it takes to send most families into a downward debt spiral. We have shared lots of tips in the past for avoiding debt, but it is also important to get advice from a financial advisor or bankruptcy attorney before you decide to file.

According to John Rao, a bankruptcy attorney with a Boston-based consumer advocacy group, you should “first explore opportunities to resolve problems outside of bankruptcy. Bankruptcy isn’t going to help everyone.”

Typically, you will want to consider bankruptcy if:

  • Most of your debt is “unsecured” (such as credit card bills or medical bills)
  • You are hounded by calls from collection agencies at home and at work
  • You have had wages garnished or your bank account frozen after a judgement
  • You have been sued

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New York man dodges eviction for 20 years by abusing the bankruptcy system

One of the most common reasons that people file for bankruptcy is to stop foreclosure actions. Rubin & Associates help DFW area residents and property owners with cases like these quite often.

Every once in a while, stories pop up about people who abuse the system, and one of the most extreme cases we have ever heard hit the news last month. Reported in major publications like Fox News and the New York Post, a man in New York has avoided eviction for more than 20 years by filing multiple bankruptcy cases.

According to the article at the New York Post, the man bought a Long Island home for $290,000 in 1998 and made his first mortgage payment to his lender, Washington Mutual – and that’s the only payment he ever made. He has claimed bankruptcy seven times and filed four lawsuits over the years, all focused on letting him stay in the home. (more…)

Should I File For Bankruptcy?

Filing for bankruptcy is a huge decision, and usually it has to be made under pretty extreme stress. Your circumstances are unique – so the best way to know if you should file is to call us at 214-760-7777 for a free consultation. The pandemic and ensuing lockdowns have made the situation even more stressful for many DFW area residents. This post will help answer a few high level questions, but it is always better to talk to an expert to get answers about your specific situation.

In general, these are a few of the most important questions to consider before filing for bankruptcy:

  • Can you pay back your debts outside of bankruptcy?
  • Are creditors suing you to collect their debts?
  • Are you facing foreclosure or repossession of your property?
  • How much property do you own?

Can you pay back your debts outside of bankruptcy?

Before you decide to file for bankruptcy, think about the types of debt you are trying to eliminate – and consider whether you can pay off those debts outside of bankruptcy. For example, if your main struggle is credit card debt, determine whether you can really afford to pay it off. If you make enough money to pay back your credit cards, you could consider consolidation, where you combine them into a single loan or settle your debt with the credit card company. (more…)

By |May 25th, 2021|Bankruptcy, Personal Finance, Texas Bankruptcy|Comments Off on Should I File For Bankruptcy?

Tax consequences of bankruptcy

eliminate income tax debt with bankruptcyIt’s tax season again, and with the COVID tax delay, taxes are almost due. Every spring, we hear lots of questions from potential clients about the tax implications of filing for bankruptcy. It’s a fairly simple answer – it depends on whether the debt was discharged in bankruptcy or just forgiven by the creditor.

Tax implications of debts discharged in bankruptcy

If your debt is discharged as part of your bankruptcy case, there are no income tax consequences. Since the debt is excluded from your gross income, you do not have to worry about anything with the IRS.

Many times, you will receive a 1099-C form , which is for debt that has been canceled or forgiven. If your receive one, you will just need to file Form 982 with your taxes, which lets the IRS know that the debt was in fact discharged in your bankruptcy case.

What about debts cancelled outside of bankruptcy?

If you have borrowed from a commercial lender and that lender later forgives or cancels your debt, you will most likely have to include the canceled amount as income when you file your taxes. Typically, loan proceeds do not count as income because you are obligated to pay back the loan. Once the loan is canceled or forgiven, that makes the loan count as income.

If you are in this situation, your lender will have sent you Form 1099-C, “Cancelation of debt to the debtor.” They are required to send this form by the 31st of January of the year following the year when your debt was canceled.

The unpaid portion of your loan will be reported as income, unless:

  • You are insolvent when the debt is canceled.
  • You operate a farm and the debt results from your farm, more than half of your income from the last 3 years was from farming, and the loan was owed to an agency regularly engaged in lending.
  • It is a non-recourse loan
  • It is excepted by the Mortgage Debt Relief Act of 2007

If you are in a rough financial spot and you are considering bankruptcy – but wondering about the tax implications – call us today at 214-760-7777 and schedule a free consultation. We will walk you through the various parts of bankruptcy so you fully understand how things will work.

Should you keep your car after bankruptcy?

should-you-keep-your-car-after-bankruptcyIt’s a question we hear all the time – after a client files their bankruptcy case, they ask us “Should I keep my car?”

Many times, if you’re filing for bankruptcy, you’ve been struggling with debt for quite a while, so it’s likely that you were behind on car payments. Now that the bankruptcy case is filed, you’re wondering if keeping the car is a good choice to make.

In most cases, your car is an absolute necessity – you’ve got to use it to get to work, or to handle everyday errands. In some cases though, the amount owed on your auto loan might not make sense after your bankruptcy case.

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5 things to do after you file bankruptcy

what to do after bankruptcyYou have just filed your bankruptcy case, and now you are on pins and needles. You’ve gotten all the paperwork together, answered all our “lawyer questions”, and filed all of your schedules with the court. What happens now?

Actually – not much… Most of the work has already been done at this point.

It is important to stay engaged, though. You do not want to hand everything to your attorney and then go silent.

We get the “what next?” question all the time, so we thought we would put together this list of 5 things to do AFTER you have filed your bankruptcy case.

1. Ask us questions

If you don’t understand something, let us know – there are no stupid questions! Let us know you are confused and we will take the time to explain things.

2. Open all your mail

Most of our clients are tired of collection notices, so they are not quick to open their mail. Make sure you are opening everything so you will see anything we send to you. We will send you a copy of everything so you know what is going on and what we are doing for you.

3. Respond quickly

If we ask you for information or any documents, don’t make us wait. Bankruptcy cases typically move pretty quickly, so we do not want a delay to complicate your case.

4. Keep us posted

Major life events can affect a bankruptcy case. If you have changed jobs, lost your job, had a major accident, or moved, you need to let us know.

5. Don’t worry!

Bankruptcy is confusing and scary – but our staff does this all the time. We have years of experience with bankruptcy cases, and most cases have no unexpected complications.

We are always here to help! If you have any questions or concerns, or you just need something explained, give us a call at 214-760-7777 and we will explain whatever you need.

The timeline for Chapter 7 bankruptcy

Bankruptcy can be an incredibly stressful process – typically our clients are struggling with overwhelming debt and dealing with annoying collections calls, while trying to figure out how to move forward. Most people are curious about the timeline for a typical bankruptcy case, so we thought this infographic would help easily explain the process for a typical Chapter 7 bankruptcy case.

Chapter 7 bankruptcy timeline

Will there be more bankruptcies because of COVID-19?

As most of the country is experiencing the second round of coronavirus-related lockdowns, many Americans are wondering how COVID will affect the already stressed economy. While bankruptcy cases have slowed in recent months, most experts agree that the number of cases filed will rise significantly as we move into 2021.

Many Americans were able to make it through the first round of lockdowns this spring because of government stimulus checks, concessions from landlords, and forbearance from creditors. With no stimulus in the near term and lockdowns causing more businesses to drastically reduce hours or even shutter, it’s likely that many people will struggle.

Even with the downturn caused by COVID-19, there have been fewer bankruptcy cases in 2020 than in 2019 – there were 27% fewer cases in August compared to 2019. In all likelihood, the number of bankruptcy cases will likely skyrocket next year, possibly setting records. (more…)

6 Tips to Avoid Holiday Debt

6 tips to avoid holiday debt on Black FridayThe holiday season is upon us again, with Black Friday and Cyber Monday just a few weeks away. The holiday season, and Black Friday in particular, are designed to get Americans to spend as much money as possible. This year, the COVID lockdowns will change the way people shop for the holidays. The doorbuster shopping events won’t happen this year – everyone will be shopping from home.

Shopping online can be more dangerous for your debt situation, since you’re not physically at the store and paying attention to the prices of the items you’re buying. Plus, credit cards give you the illusion that you can spend more money than you currently have, so many Americans fall deeper into debt during the holiday spending season. Making matters worse, gifts bought on credit cards end up costing far more than if you paid cash, once you factor in interest rates and finance charges. There’s also the fact that if you max out your credit limit, your credit score will drop.

Once the holiday season is over, the warm fuzzies disappear, and you’re left with even more debt. This year, we thought we’d share a few holiday spending tips to help you avoid over-spending, and hopefully help you avoid any more debt. Once you realize that Black Friday is specifically designed to get you to spend more money than you planned on spending, it’s easier to avoid the holiday credit card blowout.

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