Posted on August 05, 2019 in Student Loans

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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 Posted on August 02, 2019 in Chapter 7 Bankruptcy

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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 Posted on July 31, 2019 in Chapter 13 Bankruptcy

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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 Posted on July 30, 2019 in Chapter 13 Bankruptcy

The simple answer here is, no. In fact, most people file a Chapter 13 Bankruptcy in order to keep their home and save it from foreclosure. If you are current on your mortgage payments, the Chapter 13 typically has no effect on your home. You simply continue to make the mortgage payments directly to the Mortgage company. If you are behind on your home when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is a repayment and reorganization plan. The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.

In order to keep your home through a Chapter 13 Bankruptcy, you will need to be able to make your regular monthly mortgage payment in addition to repaying any arrearage owed to the mortgage company over a 36-60 month period. Our District, The Northern District of Texas, utilizes the "Conduit Program". This simply means that your regular principal and interest payments are repaid through your Bankruptcy Payment rather than directly by you to the mortgage company.

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 Posted on July 29, 2019 in Chapter 13 Bankruptcy

The simple answer here is, no. If you are current on your car payments, the Chapter 13 typically has no effect on your car. You simply continue to make your car payments directly to your car lender. If you are behind on your car when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is a repayment and reorganization plan. The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.

In order to keep your vehicle through a Chapter 13 Bankruptcy you will need to be able to at minimum have 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 of 10% of each one of your payments. This effectively makes the interest rate around 15% on the outstanding principal balance.

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 Posted on July 21, 2019 in Chapter 13 Bankruptcy

The court allows a Debtor in a Chapter 13 Bankruptcy to keep $2,000.00 of any tax refund with no questions asked. The Court and Trustee’s often allow a Debtor to retain even more than the Court provided $2,000.00 due to credits such as the Earned Income Credit and certain other tax credits and exemptions. Finally, if a Debtor has unexpected expenses, home repairs, vehicle repairs, medical bills, etc. that are outside of the constraints of what a normal budget can provide for the Court will often allow additional funds to be kept often times the full amount of the refund.

The Process for Tax Returns and Refunds in a Chapter 13 Bankruptcy:

1). Prepare and file your tax return with the IRS through the normal manner with which you file a return.

2). Receipt of your tax refund. Upon receipt you may spend up to the $2,000.00 allowed by the Court until you hear further from your case trustee/ attorney.

3). Your Attorney will provide a copy of your tax return to your case trustee. Upon receipt your case trustee will review your tax return and send a letter to you and your attorney stating what if anything they believe is owed to the Trustee from your tax refund.

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 Posted on April 25, 2019 in Bankruptcy

Behind on your car payment? You’re not alone. A record number of Americans are behind on their auto loan payments. This is a somewhat unsurprising fact, as lower income individuals are more frequently able to obtain financing on cars due to what seems to be an increase in predatory and sub prime lenders nationwide.

If you find yourself behind on car payments, and have your car repossessed, you will be on the hook for the "deficiency balance" which is the difference of the amount the car sells for at auction and the amount owed on the vehicle. For instance, if your 2010 Toyota Camry sells at auction for $4,000, but you owed $14,000.00 to the lender, the lender can sue you for the $10,000.00 deficiency balance, plus costs and attorney fees. This applies even if you voluntarily surrendered your vehicle.

For those who are already unable to make their car payment, a judgement of this amount is almost impossible to pay. The lender can take money out of your bank account to satisfy the judgement, which can put the debtor in a very dangerous position of being unable to pay rent or their mortgage.

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 Posted on March 04, 2019 in Chapter 7 Bankruptcy

Chapter 7 bankruptcy can provide an enormous amount of relief to debtors in exchange for minimal consequences. The huge upside, often combined with very little low side, can cause those seeking debt relief to question if Chapter 7 bankruptcy is fools gold. When providing consults to those in need of debt relief, I occasionally find feeling like a snake oil salesman when I hear the cynical cliché: "sounds too good to be true".

The truth, though, in most cases is that it does sound too good to be true. In a majority of my cases, a debtor can get rid of all or most of their debts, better their credit score, and keep all of their assets. Negative consequences are typically limited to the bankruptcy showing up on their credit report for 10 years, and the inability to finance a home for two years after discharge.

Even the negative consequences are usually moot; who cares about the bankruptcy on their credit report if their score goes way up? If you already own a home, who cares if you can’t buy one for two years? And if you’re renting – chances are you wouldn’t qualify for a home loan anyways because of terrible credit. Further, Bankruptcy can actually put you on faster path towards home ownership because it cleans up your credit.

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 Posted on January 14, 2019 in Bankruptcy

Bankruptcies resulting from unpaid medical bills affected an estimated 2 million people in the United States during 2013, but regardless of the cause of your growing debts, choosing the right bankruptcy law firm can help ensure that your case is navigated with efficiency and skill. But choosing the right lawyer won’t happen unless you can ask the right questions. With that in mind, here are just a few essential questions to ask your bankruptcy law firm if you want to find debt relief.

The two main types of consumer bankruptcies are Chapter 7 and Chapter 13 Bankruptcy. The amount you will be charged and the expected timeline for your case varies greatly between these two types of bankruptcies.

How will you be charged?

As is the case with any type of legal agreement or contract with a lawyer, you’ll want to know far in advance exactly how the attorney will charge you for their services. There are usually several different fees that go into determining your final price.

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 Posted on January 03, 2019 in Bankruptcy

We get it — the word ‘bankruptcy’ can sound a little scary when you don’t know exactly what it means. But the fact is, declaring bankruptcy can actually give you peace of mind and financial relief under the right circumstances. Let’s debunk some of the most common myths about bankruptcy so that you can think clearly and focus on the facts:

MYTH: Declaring bankruptcy means you lose everything.

This is a common misconception about what declaring bankruptcy truly entails. In most cases, you can keep your material belongings, even your home and your car.

"The vast majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. There are two reasons for this. First, you can carve out some basic assets, called exemptions, that are necessary for day-to-day life…And for your possessions that aren’t covered under exemptions? Well, the creditors likely don’t want them," writes Sean Pyles on Nerdwallet.

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