Austin Bankruptcy Law Blog

Austin residents that posses mounting piles of debt know that the worry and stress involved can become very burdensome. For some, credit card debt, medical debt or car loans cause overwhelming feelings of anxiety. Of course, this situation becomes even worse where debt collectors constantly call to remind debtors about their obligations. In some cases, however, these creditors and the debt collectors that they employ use over-aggressive and even illegal tactics.

Due in large part to the weak economic environment of the past few years, more people across the country are facing increasing debts. Accordingly, creditor harassment is a growing problem. In a recent example, one woman went to the hospital emergency room because she had kidney stones. As the woman was waiting for treatment and medication, a debt collector found her and demanded that she pay for the medical treatment immediately. As a result, the Minnesota Attorney General's office is suing the debt collection firm with which the hospital contracted for collection services. This type of harassment is reported to have happened across 20 states.

Millions of people across the country and from all walks of life face financial challenges. This has been especially true during the difficult economic environment of the past few years. Recently, former pro football star Warren Sapp filed for bankruptcy under Chapter 7 to eliminate debt totaling more than $6.7 million. While Sapp still earns a hefty monthly salary in excess of $115,000, he has been unable to pay his creditors.

Like Sapp, many people struggling to pay their debts turn to bankruptcy by filing under Chapter 7. Last year, thousands of Texans filed for bankruptcy under Chapter 7. One of the benefits of filing under Chapter 7 is that the process, usually lasting between three and six months, is much quicker than some other methods that people and businesses can use to alleviate debt under the bankruptcy laws. In addition, a person filing under Chapter 7 liquidation does not have to file a debt repayment plan. Rather, in some instances a court-appointed trustee liquidates the debtor's non-exempt assets to satisfy as much of the debt as possible.

According to the Federal Reserve, Americans have more than $2.5 trillion in consumer debt. Debt, usually in the form of credit cards, is a familiar topic for people all over the country, including Austin residents. Even our elected officials keep the subject of credit card debt in the forefront. They commonly refer to the national debt as "our nation's credit card."

While most people have firsthand knowledge of some form of consumer debt, few know how to discharge debt when it becomes overly burdensome. Lenders are eager to hike interest rates and charge exorbitant fees to consumers who have trouble repaying their debts. But these lenders are usually unwilling to find reasonable methods of repayment when their borrowers struggle to make minimum payments.

According to the Federal Reserve's most recent estimates, American consumers -- including many in Texas -- hold billions of dollars in credit card debt. For many credit card users, the economic hardship of the last few years has resulted in them missing some payments to their creditors. Banking giant JPMorgan Chase may have taken advantage of tens of thousands of these credit card borrowers.

Former employees at JP Morgan Chase reported that they often did not verify documents detailing the amounts of debt that borrowers owed to the bank. Instead, employees signed the documents regardless of whether they could verify the amounts of outstanding debt.