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When you file for bankruptcy under Chapter 7 or Chapter 13 it can stay on your credit report for up to 10 years. Luckily for most of our clients, the bankruptcy being reported on their credit report isn’t too damaging. Most of our clients actually see their score improve, because their debt-to-income ratio instantly improves, and because creditors are required to remove any negative reporting from the credit report. As a result, getting a car, loan, or credit card is typically not difficult.

Additionally, there are actions you can take on top of filing bankruptcy in order to hasten the process of improving your credit score. This post details some strategies to achieve that goal.

Chapter 7

You can discharge most, if not all, of your debts after filing for Chapter 7 bankruptcy. This means that a lender cannot collect a discharged debt, and you’re no longer responsible for repaying it.


Bankruptcy Due to Medical Bills

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Medical bills are a very common reason people file for bankruptcy. For those who cannot pay their medical bills and do not file for bankruptcy, their situation likely will worsen.

If you are unable to pay medical bills, you’ll start getting late-payment notifications, and late fees will accrue. The medical provider may sue you in the future and win a monetary judgment against you, or it could also result in wage garnishment, a bank levy, or the placing of a lien against your non-exempt property.

Medical Bankruptcy

If you can’t pay the bill and it appears that the creditor will pursue you for payment, your good credit will suffer since a collection action will appear on your credit report. If they sue you and win the case, the medical provider could garnish your bank account or pursue other collection measures. When it comes to bankruptcy, filing as soon as possible could help you get back on your feet financially faster.


You may be asking, though, how you can keep your car when filing for bankruptcy.

There are two main types of bankruptcy: Chapter 7, which involves liquidating non-exempt assets (in Texas thankfully very few assets, for most people, are non-exempt), and Chapter 13, which focuses on debt repayment. What will happen to your vehicle if you file for bankruptcy is determined by the type of bankruptcy you declare and the amount of equity you have in your car.

In case you file Chapter 7

Most of your debts are discharged, meaning your legal liability to pay the creditor/ debt has been extinguished in Chapter 7 bankruptcy. In exchange, you must surrender non-exempt property which the bankruptcy trustee will sell and use the funds to pay your unsecured creditors. In Chapter 7, the ability to keep your vehicle is determined by whether or not your equity is classified as exempt and whether or not you are behind on your car payments. (Equity = Balance of Loan – Vehicle Value) An experienced attorney can help you navigate the potential pit falls of filing for bankruptcy with a vehicle that you want to keep or surrender. It is extremely unlikely to have a non-exempt vehicle in a Chapter 7 bankruptcy.


If debt has taken over your peace of mind, you may be considering filing for bankruptcy. An experienced attorney can explain your choices and help you find a solution to collection letters and harassing phone calls from creditors. Bankruptcy can alleviate your financial stress and provide a fresh start.

If you’re considering filing for bankruptcy, you’re probably worried about losing your house, car, or other valuables. This is where the experience of Acker Warren, P.C. can help. An experienced lawyer can assess your case and come up with a solution that is beneficial for you and helps you retain your assets.

Filing for Chapter 7 and Chapter 13

When choosing how to stop foreclosure proceedings in Texas, one option is to declare bankruptcy. The automatic stay is in effect immediately upon filing of a Bankruptcy Petition. The Automatic Stay halts all collection actions against a Debtor including foreclosure. Your mortgage creditor is prohibited by the Court from moving forward with foreclosure once the case has been filed.


Over many years of practicing bankruptcy law, we have found that certain questions consistently reoccur. If you are considering filing for bankruptcy, the below questions have likely crossed your mind.

Please remember that this is broad information that may or may not apply to your unique situation. It’s critical to discuss your specific circumstances with an attorney who has the knowledge, expertise, and experience to assess your financial situation.

Below you will find the answers to frequently asked bankruptcy questions. These answers can help you decide whether to proceed with the bankruptcy procedure or look into alternative debt-relief options.


Prevent or Avoid Repossession

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One of the most common concerns among bankruptcy filers is the potential of losing their property after filing the case. Our clients obviously rely on their vehicles to go to and from work and home. Some people file bankruptcy with their vehicle loans already in default. When it comes to preventing repossession during bankruptcy, what is the best advice?

Our goal is to inform our clients about all aspects of bankruptcy. Having the correct information helps individuals to make educated decisions while avoiding potentially harmful information. There are a lot of misunderstandings about Texas repossession law. Any property encumbered by loans, like automobiles, furniture, and appliances, may be subject to repossession by a creditor if you default on your payments. If you are late or otherwise default on your loan contract, repossession may occur without warning.

If you fall behind on payments on your car or other collateral, the first step is to contact your creditor. The creditor is not required to cooperate with you, even if it’s only a temporary problem. If they do, be careful to have any arrangement in writing, as creditors may still seize your property after accepting partial payment.


You may have heard that student loans are not dischargeable in bankruptcy. However, this is a construed and oversimplified statement. Under certain circumstances, you can get your student loans discharged, but the threshold is higher, and the process is more complicated than it is for other forms of debt.

To do so, you must demonstrate that paying the debt will cause you and your dependents undue hardship. Courts use different criteria to determine whether a borrower has shown undue hardship. Our District, the 5th Circuit uses the Brunner Test.

The student loan will get canceled if you can successfully prove undue hardship. Declaring bankruptcy also shields you from collection actions on your debts.


Facts about Bankruptcy and Taxes

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There is a life after bankruptcy, and it includes taxes. Since bankruptcy and tax laws are both complex, it is critical to know how filing for bankruptcy may impact previous tax debt as well as future commitments to the IRS before you file.

The Bankruptcy Code requires a debtor to file an individual tax return or request an extension, per the IRS Publication 908 Bankruptcy Tax Guide and this return MUST be provided to your case Trustee. The bankruptcy case may convert or dismiss if this does not occur.

Bankruptcy and taxes can make anyone feel uncomfortable, especially during hard times. In this article, Acker Warren P.C. will share some facts about bankruptcy and taxes so you can prepare for what to expect and hopefully reduce some stress.


The research team at Super Lawyers selects no more than 2.5 percent of the lawyers in the state to obtain this honor every year. The Texas Rising Stars list for 2021 included Arlington Based Law Firm Acker Warren P.C.

Super Lawyers is a Thomson Reuters business that recognizes distinguished lawyers from more than 70 fields of practice that have attained a high rate of peer recognition and professional success. The picks for the Rising Stars list are made by a patented multistage process that includes a statewide lawyer survey, an unbiased polling assessment of candidates, and peer reviews by practice field. As a result, a trustworthy, extensive, and varied list of outstanding attorneys develops.

About 2.5 percent of lawyers in each state are named to the Rising Stars list. To be considered for Rising Stars, an applicant must be under 40 years old and have practiced for a decade or less. Licensed and practicing attorneys are eligible to be nominated by their peers.


Getting sued by a debt collector can be overwhelming. Financial hardship takes a toll on our minds and can affect our mental health. However, it is essential to know that you’re not alone and have options if you’re facing debt-related problems. To understand what to do when you have been served, you’ll need to learn more about what happens to unpaid debts and how these lawsuits typically proceed.

What Happens When You Don’t Pay Your Debt

When you miss a monthly payment on a loan for the first time, the creditor will most likely contact you or send you a letter via email or postal mail to recover the overdue amount. After several months of missed payments, the initial creditor is likely to cut losses and sell the loan to a collection agency. The debt collector who bought your debt will then start collecting from you. If all collection efforts fail and you proceed to fall behind on your payments, creditors can file a lawsuit against you.

You Got Served. What Does that Mean?

The creditor will inform you of the lawsuit by “serving” you with a copy of the allegation and a court summons. The summons includes details about when and how to respond, as well as the date of the court hearing. The first thing you need to know is that you can not just ignore a lawsuit notification. Ignoring a lawsuit may result in the court issuing a default judgment. A default judgment means the creditor can garnish your wages, freeze a part or all of your bank account, or put a lien against your property.


On some occasions, debtors must act quickly to stop a creditor’s collection action such as garnishment, foreclosure, or repossession. In that case, quickly declaring bankruptcy may be beneficial. When a Debtor files a case, the court issues an automatic stay, which prevents most creditors from pursuing recovery efforts against you. However, completing all the bankruptcy forms takes time. If time is of the essence, you can file an emergency bankruptcy to obtain an automatic stay and file the remaining documents afterward.

An emergency bankruptcy filing is filed without any of the requisite paperwork to avoid a collection proceeding that is about to happen, such as a foreclosure, repossession, or wage garnishment. With an emergency bankruptcy filing, the automated stay is activated, halting all collection actions. The filer gets some time to complete the remainder of their bankruptcy forms. If the filer does not meet the deadline, the bankruptcy is dismissed, lifting the automatic stay.

What Will You Need?

When completed, the average bankruptcy petition will likely exceed fifty pages. However, if you are undergoing a foreclosure auction, repossession, wage garnishment, collection lawsuit, or a similar time-sensitive issue, completing all of the paperwork before the action can be impossible.


Some people find themselves in a situation where they are unable to repay all their accumulated debts. Whether it is due to medical emergencies or a job loss, these dire situations put some people in a position where they have no choice but to max their cards and deplete their savings. Unfortunately, making the minimum monthly payments on credit cards and loans remains challenging even with unemployment checks or a temporary job.

Filing for bankruptcy can be a viable approach if you have financial issues. All collection actions are halted, including phone calls, wage garnishments, and certain lawsuits. It also eliminates various debts, such as credit card accounts, medical bills, and personal loans. However, it does not eliminate all responsibilities. For example, you still need to pay your student loans (most filers will NOT qualify for student loan discharge) as well as arrearages for child support, alimony, and most tax debts.

Life after bankruptcy means a new beginning. Your credit score will likely improve immediately upon discharge of your case. This is due to a large portion of one’s credit score stemming from the Debt-to-Income Ratio. The bankruptcy filing will stay on your credit report for ten years. However, it will only affect you for about two years. Most filers find that they can purchase a vehicle the instant a case is discharged. Additionally, debtors can expect a reasonable interest rate on a vehicle approximately a year after discharge. Most filers find that they are able to receive a credit card as soon as the Bankruptcy has been discharged. The reason for the rapid recovery of one’s credit is because you are viewed as a lower risk post discharge. You have legally written off at least some of your previous debts thus lowering your debt-to-income ratio. The largest affect stemming from a bankruptcy filing is a filers ability to qualify for a mortgage. Most filers find that they can qualify for a mortgage 2 years after a Chapter 7 discharge.


Filing for Divorce and Bankruptcy

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Financial struggles are a common source of marital difficulties that lead to divorce. Going through a tough divorce during the COVID-19 pandemic is difficult enough. Still, the struggles will be exacerbated if you lose your job or have to pay for extensive medical attention. Even if you don’t get sick or lose your job, divorce hurts most peoples’ finances and is the leading cause of bankruptcy in the United States.

Divorce and bankruptcy are two of the most stressful and mentally draining experiences a person can go through. Nonetheless, planning ahead will make both your bankruptcy and divorce less complicated and less expensive. The amount of property and debt you have, as well as the form of bankruptcy you intend to claim, determine if you can file for bankruptcy before or after a divorce.

In addition, applying for divorce and bankruptcy at the same time is not a smart option. Filing for bankruptcy when divorcing will confuse property separation, make each spouse’s living arrangement less predictable, and cause both the bankruptcy and the divorce to be prolonged.


Coronavirus and Bankruptcy

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Bankruptcies track the financial climate as companies and consumers pursue relief from macro-economic disruptions. During the COVID-19 crisis, though, this relationship has flipped around. Despite media reports and many experts’ expectations on how the coronavirus and bankruptcy would interact, consumer and small business filing have sharply declined since mid-March 2020.

Despite accounting for a limited proportion of all bankruptcies, the number of Chapter 11 filings by major companies has risen since 2019. Consumers, small companies, and multinational firms have had different financial experiences during the COVID-19 crisis. Large companies have pursued and obtained bankruptcy protection as they would in a typical recession. Comparatively, affluent households have benefited on average from the fiscal stimulus and housing moratoria mandated by the CARES Act and other initiatives. Non-homeowners and small companies, on the other hand, may face financial, physical, and technical obstacles to filing for bankruptcy, especially in areas where unemployment is high.

Bankruptcy Overview

Chapter 7. Small businesses and consumers file for Chapter 7 to discharge debts.


How Bankruptcy Affects Credit Score

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Bankruptcy is a legal proceeding where debtors have the opportunity to reorganize or eradicate their debt. Filing for bankruptcy can be a very financially rewarding situation for those overwhelmed with debt. A bankruptcy lawyer should be consulted as filing for bankruptcy is not an easy decision.

While the main purpose of bankruptcy can help to ease your debt burdens, it provides the added benefit of typically boosting credit score. Although the bankruptcy could appear on the credit report for up to 10 years, it does not have the detrimental effect some people might think it does.

Obtaining credit after a bankruptcy case is typically very easy. Credit cards, which are important for emergencies, typically can be obtained right after discharge (albeit with low limits in the range of $250 -$500). Your credit will usually improve if you follow some simple steps to boosting it after bankruptcy.


No-Asset Bankruptcy Cases in Chapter 7

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The majority of Chapter 7 bankruptcy filers do not lose any assets through the bankruptcy process. These cases are often referred to as no-asset bankruptcy cases. In such a case, the Trustee informs creditors not to expect payment out of the bankruptcy proceeds.

In a no-asset Chapter 7 scenario, you do not have any assets that the bankruptcy trustee is allowed to take and sell for the benefit of creditors. Of course, most debtors have personal property and a home, but the debtor still normally retains all of their property because it is protected under federal or state law exemptions.

Understanding What No Asset Means

“No Asset” is a term used to describe debtors who declare bankruptcy without owning property that the Trustee or Creditors can take. It’s worth noting that this doesn’t mean the debtor is homeless or living in poverty. It implies that the debtor’s assets are all secured or shielded by exemptions or that the debtor’s assets that are not exempt are not valuable enough to warrant being sold.


Congress passed the Consolidated Appropriation Act (CAA) on December 27, 2020. The almost 5,600-page bill is claimed to be the longest bill ever enacted by Congress. Besides financing the federal government in 2021 and providing relief for individuals and businesses affected by COVID, the current bill modifies the Bankruptcy Code in at least nine respects. Most of the amendments will end after one or two years. One of the amendments would only become applicable once the Small Business Administration signs it.

Below, you’ll find a brief description of some of the amendments that directly affect the bankruptcy code.

PPP loans available to some debtors (and trustees)

The CARES Act developed the Paycheck Protection Program (PPP), the now-familiar program of forgivable loans operated by the Small Business Administration (SBA). Almost right after the CARES Act’s passing, the debtors started to apply for PPP loans, causing a debate about the supply of such loans to bankrupt businesses. The SBA repeatedly opposed PPP loans to debtors, and the case law was varied throughout the country.


Bankruptcy and Child Support

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Noncustodial parents with a child support obligation who are thinking about filing for Bankruptcy must understand the relationship between Bankruptcy and Child Support. Parents ordered to pay child support have a legal responsibility to consistently take care of their children financially, even if they are struggling with debt. Each Chapter of Bankruptcy has different requirements for Debtors who owe Child Support.

Child Support Obligor (Owes Support) & Chapter 13 Bankruptcy

Noncustodial parents who owe Child Support and file for Chapter 13 Bankruptcy still need to fulfill their responsibilities under the support order. The monthly obligation must remain current throughout the life of the case otherwise the Debtor will face dismissal of the case and or denial of discharge. If the support order is in arrears at the time a Chapter 13 is filed, those arrears would be repaid through the Chapter 13 Plan. Upon completion of the 3-5 year plan the child support would be current due to repayment of the arrears through the plan and the required maintenance of the monthly payments over the life of the plan.


Automatic Stay: The instant that a Bankruptcy Case is filed an injunction called the Automatic Stay is put into place, with certain exceptions, to prevent creditors from continuing collection actions of any kind. This includes continuation of lawsuits, phone calls, emails, letters, etc. that seek to collect a pre-petition debt.

The Automatic Stay is the first benefit of filing for Bankruptcy. The Automatic Stay prohibits the continuation or filing of lawsuits, stops foreclosures, car repossessions, etc.

What does automatic stay prevent?



Texas Bankruptcy and Foreclosure

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Failing to make mortgage payments in Texas can mean getting your home foreclosed. Lenders notify debtors about the foreclosure by mail to provide a 20 day time frame to pay the loan; if the debt isn’t paid off, lenders notify the loan is due and a sale of the property has been scheduled to cover it. There are interactions between Texas bankruptcy and foreclosure. Bankruptcies are filed to eliminate or establish repayment plans for debts and to keep property.

The law recognizes that the debtor and mortgagee have legitimate interests to protect in the property. So you might be wondering how exactly will bankruptcy and foreclosure interact in this process. There is the possibility of halting foreclosure and keeping your home if you file for bankruptcy. This is mostly achieved by filing for Chapter 13 bankruptcy which enacts an automatic stay, meaning that you get to keep your home. For this, you’ll need steady income to keep paying monthly mortgage payments along with the repayment plan.

How Chapter 13 Could Help You Keep Your Home

It’s recommended you file Chapter 13 if you have a regular and stable income, since it gives you the opportunity to come up with a repayment plan for your debts, including your mortgage. This chapter provides a more permanent solution to help you keep your home. Through the repayment plan, you’ll be able to pay your mortgage over 3 to 5 years. Keep in mind you’ll still have to cover the monthly mortgage payments.

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