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Recent Blog Posts

8 Bankruptcy Myths You Should Stop Believing

 Posted on August 26, 2019 in Uncategorized

1). Bankruptcy will haunt me forever – NOT TRUE

Chapter 7– A bankruptcy filing appears on a credit report for 10 years from the filing of a bankruptcy petition. Despite the reporting on your credit report your access to credit will come back very quickly, especially if you take some easy steps post discharge (See our blog post about steps to take post discharge to rebuild your credit).

When a Chapter 7 Case is filed your name and address are public record and notice is sent to the credit bureaus about the case filing. Car creditors especially will use this information to send you advertisements to purchase a vehicle the instant a case is filed. Our firm recommends that, if possible, you avoid purchasing a vehicle for about one year after a bankruptcy discharge. Instead you should focus on obtaining a credit card. Many of the major credit card companies will issue you a credit card with a small limit the instant a Bankruptcy is discharged.

If a Discharged Chapter 7 Debtor uses this credit line responsibly (never more than 30% of Credit Limit used, pay off in full end of the month) for approximately 1 year after their discharge, most Discharged Chapter 7 Debtors will qualify for a vehicle loan at a decent interest rate — less than 10%.

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Does a Bankruptcy Stop a Lawsuit?

 Posted on August 20, 2019 in Uncategorized

Yes.

When a Debtor files for Bankruptcy the Automatic Stay described in Title 11 U.S.C. §362 goes into effect instantaneously without further action of the Court. The Automatic Stay is an injunction that is automatically entered by the Court upon the commencement of a Bankruptcy Proceeding. The Automatic Stay disallows any further collection attempts against you that do not go through the Bankruptcy Court first. This means that all collection actions must stop including the continuation of a pending lawsuit without further order of the Bankruptcy Court.

Most of the time when a Bankruptcy is filed a Debt Collection Lawsuit is non-suited. This means essentially that the case has been dismissed because the Bankruptcy prohibits any further proceedings.

When a Bankruptcy is completed the Court will enter a Discharge. The Discharge means that your legal liability to pay any pre-petition debt has been extinguished. In the context of a pending lawsuit, the underlying debt has been extinguished leaving nothing to renew/ or continue proceedings against. Further, the Discharge order is a permanent injunction of the Bankruptcy Court that prohibits collection of pre-petition debt. If a pre-petition Creditor were to continue its collection efforts, including the filing or continuation of a lawsuit, you would have additional remedies against the creditor in Bankruptcy Court for violating the Discharge Order.

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How much does a Chapter 13 Cost?

 Posted on August 17, 2019 in Uncategorized

Often our office charges a down payment on a Chapter 13 Bankruptcy of as little as $565.00. This consists of the costs to file the case and an additional $155.00 to our office. The Court in our district sets a “no look fee.” This fee is $3,700.00 plus the costs to file your case or a total fee of $4,110.00.

What a “no look fee” means is that the Court allows that as a fee for our services without subsequent application for additional compensation. Almost all attorneys in our district charge a fee of $3,700.00 for a Chapter 13 Bankruptcy. The difference you will find between attorneys is what is charged as a down payment and what costs are included in that down payment.

90% of Chapter 13 cases filed with out office pay only the no look fee with little to no additional out of pocket expense. However, all time in our office is billed at $350.00 per hour for attorneys and $150.00 per hour for legal assistants. If your case is more complex than an average simple uncontested Chapter 13 case our office will apply for the additional compensation with the Court. Presuming approval of the Application for Additional Fees, our office will work out arrangements with you for repayment including possibly adding these amounts into the remainder of your plan. Again, 90% of case filings with our office do not exceed the Court’s “no look fee.”

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If I am married do I have to file Bankruptcy with my spouse?

 Posted on August 15, 2019 in Uncategorized

No, you do not have to file Bankruptcy with your spouse. The Bankruptcy code allows for a married person to file and individual case, and your spouse would become what is termed a “non-filing spouse”. However, you may need to provide the Court with some of their information including all of their income received in the last 6 months. This is because the Bankruptcy Code requires you to report all household income for the 6 months prior to filing.

In other words, while a spouse is not required to file a case with another spouse, they will be required to furnish certain information for the case filing specifically their income and expenses.

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My home has been foreclosed or is about to be foreclosed upon and I do not want it back/ want it back, should I file for bankruptcy?

 Posted on August 13, 2019 in Uncategorized

Maybe, depending on the advice of your bankruptcy attorney.

When a home is foreclosed upon in Texas, it must be sold at public auction on the Court house steps. This is true for judicial and non-judicial foreclosures alike. Judicial foreclosures (rare) require an added step of receiving a Judge’s blessing before it is posted. All foreclosure sales occur on the first Tuesday of every month on the Court house steps.

A public auction usually results in a sell that is significantly less than the value of the home versus if it were sold through traditional means. This means that most Debtors who have a home foreclosed will owe what is called a deficiency balance. This balance is the difference between what the home sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor. This amount can often be significant.

In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card. These amounts can be discharged in a Chapter 7 Bankruptcy without repayment presuming the Debtor qualifies for a Chapter 7 case. This amount can be discharged in a Chapter 13 Bankruptcy as well. Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the foreclosed home may receive some distribution on their claim in a Chapter 13 Bankruptcy.

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My vehicle was repossessed, and I do not want it back, should I file for bankruptcy?

 Posted on August 09, 2019 in Uncategorized

Maybe, depending on the advice of your bankruptcy attorney.

When a vehicle is repossessed and sold in Texas, it must be sold at public auction. A public auction usually results in a sale that is significantly less than the value of the vehicle if sold through a dealership or private sale.

This means that most Debtors who have a vehicle repossessed will owe what is called a deficiency balance. This balance is the difference between what the car sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor. This amount can often be significant. In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card.

These amounts can be discharged in a Chapter 7 Bankruptcy without repayment, presuming the Debtor qualifies for a Chapter 7 case. A car repossession deficiency balance, because it can be so high and burdensome to repay, is a common reason for filing Chapter 7 Bankruptcy.

This amount can also be discharged in a Chapter 13 Bankruptcy . Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the repossessed vehicle may receive some distribution on their claim in a Chapter 13 Bankruptcy. For a more detailed analysis of your situation, please contact our office and one of our attorneys can meet with you and discuss your options relating to a repossessed vehicle and any other credit issues that you may have. From there we can help you formulate the game plan that best fits your needs.

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My Vehicle was repossessed can bankruptcy help me get it back?

 Posted on August 07, 2019 in Uncategorized

Yes.

A Chapter 13 Bankruptcy can even help you retrieve a vehicle from a Creditor who has already repossessed your vehicle.

In order to retrieve and keep your vehicle through a Chapter 13 Bankruptcy you will need sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%. Further, the Chapter 13 Trustee, the person who collects and disburses your payments to creditors, charges a fee set by the Court at 10% of each one of your payments. This effectively makes the interest rate around 15% on the outstanding principal balance.

Further, a Chapter 13 plan can require payments on other debts, i.e. IRS, Child Support, Homes, Unsecured Creditors etc. It may be that your plan would require payments in addition to supporting the principal and interest due on your vehicle. For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what options you have to retrieve and retain your vehicle. Time is of the essence when filing to retrieve a vehicle. Once the vehicle has gone to auction and sold and a Bankruptcy has not been filed before hand a Bankruptcy will not help you retrieve the vehicle.

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What happens to my student loans in Bankruptcy?

 Posted on August 05, 2019 in Uncategorized

When a Debtor files for Bankruptcy the Automatic Stay of 11 U.S.C. 362 goes into effect instantaneously without further action of the Court. The Automatic Stay is an injunction that is automatically entered by the Court upon the commencement of a Bankruptcy Proceeding. The Automatic Stay disallows any further collection attempts against you that do not go through the Bankruptcy Court first. This means that all collection actions must stop including the collection of Student Loans through garnishment, lawsuits, voluntary payments, etc.

In a Chapter 13 Bankruptcy the Automatic stay lasts through the duration of your case. A Chapter 13 Bankruptcy lasts between 3-5 years. During this time, you are not required to pay on your Student Loan, and you are not able to be sued, garnished, levied, etc. as a result of the delinquency on your student loan. Most student loans are a non-dischargeable debt. While you are not required to pay on the student loans during the pendency of your case they will continue to accrue interest during the course of the case, and you will owe more upon conclusion of the bankruptcy than you did at the beginning due to the accrued interest. Often a Chapter 13 buys a Debtor the time necessary to plan to repay the student loans while discharging certain unsecured debt to free up capital to be able to repay Student Loans upon completion of the Chapter 13. Upon completion, you would reach out to the Student Loan creditor and make arrangements to resume regular payments on the debt.

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Can I get rid of my tax debt in a Chapter 7 bankruptcy?

 Posted on August 02, 2019 in Uncategorized

Maybe.

Tax debt can be very crippling. The IRS is often aggressive about collecting their debt, employing the use of liens and bank account garnishments to take what they believe is owed to them.

Some tax debt, luckily, is dischargeable in a Chapter 7 Bankruptcy.

First and foremost, your tax return MUST have been filed timely in order for it to be dischargeable. If you filed your return late, the debt is not dischargeable. If you timely filed for an extension, and then timely filed your return within the time allotted pursuant to that extension, your return is considered timely filed.

Secondly, to discharge the tax debt, the tax return must have been originally due at least three years prior to your bankruptcy filing date. For example, if you owe taxes for tax year 2015, that return would have been originally due April of 2016. Thus, you must file after April of 2019 in order to discharge your 2015 tax debt.

These are the two main obstacles to discharging your tax debt. There are a few other nuances, but your bankruptcy attorney can guide you through those to make sure your tax debt is dischargeable.

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Can I purchase a vehicle while in a Chapter 13 Bankruptcy?

 Posted on July 31, 2019 in Uncategorized

Yes, it is often possible to purchase a vehicle while you are in a Chapter 13 Bankruptcy. In order to purchase a vehicle, it is necessary to get the Court’s permission first. There are a few things that you will need to do in order to receive the Court’s Approval.

1). The Court will not grant permission to purchase any type of luxury vehicle, i.e. Mercedes, BMW, Lexus, Etc. The Court sets limits on the amount that can be financed. This limit is $21,000.00. The Court sets limits on the amount of the monthly payment. This limit is $500.00 per month. The Court sets limits on the amount you can pay in interest on the loan. This limit is 21%.

2). Once you have picked out a vehicle that fits the above parameters, then you will need to approach the dealership about the vehicle that you are interested in. You will need to work out terms that fit within the above Court restraints. You will need the dealership to provide you with a proposed sales contract. You CANNOT sign a contract for purchase until the contract is approved by the Court.

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