The 2005 bankruptcy law requires that debtors filing for bankruptcy take two mandatory classes designed to educate them about personal finance. The first class is a credit counseling course which must be completed before filing for either Chapter 7 or Chapter 13 bankruptcy and the second class is the Personal Financial Management course which must be completed within 45 days after filing bankruptcy; but before receiving a discharge through bankruptcy. This is important because if the debtor does not complete this second course after filing for bankruptcy, the Chapter 7 or Chapter 13 bankruptcy may be closed without a discharge.

There are three main objectives of the Personal Financial Management course:

1. The help the debtor understand the benefits of creating short-term and long-term financial goals.
2. To teach the debtor how to create a budget.
3. To teach the debtor how to balance a checkbook and reconcile bank statements.

The purpose of these courses is to help the debtor become financially literate and avoid another bankruptcy.

Take the Personal Financial Management course with a company approved by the US government. See the approved list for Texas here http://www.usdoj.gov/ust/eo/bapcpa/ccde/DE_Files/DE_Approved_Agencies_HTML/de_texas/de_texas.htm

Many legal residents hoping to secure a green card or citizenship face many financial difficulties, but are apprehensive about filing for bankruptcy because they fear it may hurt their immigration process. The good news is that there is no immigration law, statute, or regulation that states that if you file for bankruptcy you cannot become a naturalized citizen or apply for a green card. Not only that, but Form N400 the Application for Naturalization doesn’t even ask applicants about bankruptcy. The only question asked that’s related to debts is if you failed to file a tax return which doesn’t necessarily have anything to do with bankruptcy. Also, remember that just because a person files for bankruptcy doesn’t mean that they failed to pay taxes or failed to file a tax return. If you are filing for bankruptcy and plan to apply for citizenship in the United States within five years, speak with your Dallas Fort Worth attorney first.

The 2005 bankruptcy law made non-support obligations from a divorce dischargeable in a Chapter 7 bankruptcy only if the discharge would not harm the spouse who is owed the obligation. However, Chapter 13 bankruptcy makes some debts from property settlements in divorce proceedings dischargeable under the law. Remember, only some property settlements, not support settlements are dischargeable under Chapter 13 bankruptcy law. But the court must first determine if the debt is a support obligation or a property settlement.

The bankruptcy court will ask the following questions:

• In the event of remarriage or a child reaching 18, does the obligation terminate or reduce?
• Will the obligation be paid in installments or a lump sum?
• Are there minor children?
• What is the education and heal of all parties involved (including children)?
• At the time of the divorce was there a need for support?

Generally speaking anything labeled alimony or support will not be discharged in Chapter 13 or Chapter 7 bankruptcy.

According to an article in the Dallas Morning News U.S. District Court Judge Christopher Droney ruled that a provision restricting the advice lawyers can give bankruptcy clients is unconstitutional because it is too broad, prohibiting attorneys from advising their clients to incur any debt, including debts that are legal and desirable in some cases.

The Judge held that it was unconstitutional to restrict an attorney’s ability to give clients legal advice about whether or not to incur debt. I agree with the Judge, the provision of the 2005 bankruptcy amendments restricting an attorney’s ability to advise clients to incur debt was wrong and needed to be overturned.

I do disagree with Droney on one point. Judge Droney ruled that an individual did not need an attorney to file for bankruptcy. Of course every citizen has the right to represent himself in the matters of law; but encouraging individuals to navigate the new, complex rules governing bankruptcy without the help of counsel can be an injustice in and of itself.

National Guard and Reservists Debt Relief Act of 2008 is an Act to amend the Bankruptcy Abuse Prevention and Consumer Protection Act to exempt for a limited period, from the application of the means-test presumption of abuse under chapter 7, qualifying members of reserve components of the Armed Forces and members of the National Guard who, after September 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days.

It would exempt military reservists called to active duty and certain others from application of the means test in chapter 7 bankruptcy.

The Act would cover around 450,000 Guard members and reservists who have been deployed to Iraq and Afghanistan over the past six years. Between September 11, 2001 and November 30, 2007 some 450,000 Guard members and reservists have been deployed to Iraq and Afghanistan. Up to one-quarter of deployed Guard members may face financial problems when they return because of a fall in income levels while they are overseas. They can now skip the means test enacted under the Bankruptcy Abuse Prevention and Consumer Protection Act which made filing for bankruptcy a little tougher. It makes the path to debt relief a little easier for the deployed Guard members.

The average American family now carries over $8,000 in credit card debt. That figure is likely to increase given the present state of the economy. In many cases, it is unfair practice of the credit card companies that have contributed to the debt of the average American family. Credit card companies have for long hit consumers with unfair fees, unwarranted interest rate hikes and other unfair practices.  

The Credit Card Holders Bill of Rights Act of 2008 seeks to change all that. The Act is a balanced approach to reforming major industry abuses and improving consumer protections for cardholders. It will put an end to many of the tricks and traps that make cardholders incur interest rate hikes and pricey fees and protect them from arbitrary interest rate hikes, hidden fees, due date gimmicks, and misleading account terms.  

The Act seeks to amend the Truth in Lending Act. It prohibits creditors from using certain information, including information in a consumer report or any change in a consumer’s credit score, as the basis for increasing any annual percentage rate (APR) of interest on the consumer’s outstanding balance under an open end consumer credit plan, except for actions or omissions of the consumer directly related to such account. Under this Act, a creditor cannot change any term of the contract or agreement of an open end consumer credit plan until contract renewal, except for specific material reasons already contained in the contract or agreement.

The credit card company must give advance notice of credit card account rate increases. A consumer who receives such as notice can cancel the credit card without penalty or the imposition of any fee; and pay any outstanding balance that accrued before the effective date of the increase at the APR and in the repayment period in effect before notice was received.

Creditors cannot impose interest on credit repaid within the interest-free repayment time period and fees on any outstanding balance on a credit card account attributable only to accrued interest on previously repaid credit.

The Act mandates that each periodic statement of account should provide specified information on obtaining the payoff balance. Creditors cannot furnish information to a consumer reporting agency concerning a newly opened credit card account until the consumer has used or activated the credit card. A consumer can now opt-out of creditor authorization of over-the-limit transactions if fees are imposed. The Act also restricts the frequency of over-the-limit fees.

It encourages fair competition and sets no price controls, rate caps, or fees. It gives American credit card holders a fair deal.