Houston Bankruptcy Blog

Although Texas consumers who are falling behind on payments might feel powerless when confronted by debt collection agencies, the Fair Debt Collection Practices Act places limits on the behavior of these companies. This federal law establishes that collectors cannot act in an abusive manner toward people.

Most sources of debt fall under the protection of the act, including mortgages, auto loans, credit cards, and medical bills. The law does not apply to actions that original creditors might take to contact people who have failed to pay, but third-party collection agencies must adhere to the terms of the FDCPA. Debt buyers and attorneys also fall under the purview of the law.

In most cases, Texas consumers who file for bankruptcy receive immediate protection from creditors trying to collect debts. Usually, courts issue an automatic stay when a bankruptcy case is filed. This court order prevents collection actions while the bankruptcy case is in progress. Bankruptcy law holds creditors accountable if they willfully violate the stay.

During the first one or two weeks after filing a case, creditors might continue to contact debtors simply by mistake. These communications generally represent innocent errors by entities that were not aware of the bankruptcy filing. A week might pass before court notices reach creditors in the mail. When debtors receive calls from creditors during this early phase of the bankruptcy, they should provide their court case numbers and inform them about the automatic stay. People also have the right to inform creditors directly as soon as they receive their automatic stays. This move could be especially important when repossession or foreclosure threatens someone's property.

Filing for bankruptcy isn't an easy decision for anyone in Texas considering this option to manage debt. Once it's decided to explore options with Chapter 13, many people have questions about the details associated with this approach to bankruptcy. With income, there is no limit for filing, nor is there a limit to how much debt someone can have. However, there are limits with secured and unsecured debt: $394,725 and $1,184,200, respectively.

It doesn't matter where someone's income comes from when filing for Chapter 13 bankruptcy as long as there is an honest desire to make arrangements to pay down debt; income sources will need to be disclosed within two weeks of filing. Debtors are also required to provide proof that they filed their state and federal income taxes for the past four years. Failure to do so could result in a delay or dismissal.

Though once a taboo topic, bankruptcy is now receiving recognition as the tool that it is meant to be. In many cases, it can aid people in gaining the fresh financial start they need.

In particular, a Chapter 7 bankruptcy can be helpful for entrepreneurs. For those considering this option, there are a few important factors to be aware of in order to gain the full benefit of the bankruptcy process.