1). If you surrendered your vehicle and are unable to purchase a cash car or use a friend or family member’s vehicle then you will need to purchase a vehicle. We advise our clients to start looking at traditional dealerships. Try to avoid tote the note lot places. Most major dealerships can work with a Debtor post discharge to get a vehicle financed. If you do not require a vehicle move on to step two. If you can put off purchase of a vehicle for about one-year you should get a decent interest rate from any dealer presuming you follow step 2.

2). Obtain a credit card. If possible, this should be a normal credit account, not a secured card. Most of our clients find that the major banks will issue them a credit card with a small limit immediately upon completion of a Chapter 7. Pick something that you spend your money on each month – i.e. gas, groceries, utilities — pay the card off each month prior to the due date, and never have more than 30% of the credit limit outstanding at any one time. If you need to pay the credit card more often than monthly to keep from hitting the 30% we recommend that you do so. If a Debtor follows the above for approximately 1 year after the case is discharged then that Debtor would likely qualify for a reasonable auto loan less than 10% interest.

3). 90 days after a Debtor’s discharge date they should obtain a copy of their credit report from all three credit bureaus. Any unsecured debts that were incurred prior to a bankruptcy filing should show as a 0 balance and included in a bankruptcy. If an included debt shows up in any other way you should dispute these items directly with the credit bureaus. A debtor will need to show proof of the Chapter 7 Filing, Inclusion of the referenced Debt in the paperwork, and a copy of the Discharge Order entered in the case. If there are not any items to dispute on a Debtor’s credit report, then a substantial increase to the Credit Score should be seen about this time. If there are items to dispute the Debtor should see a substantial increase in credit score upon favorable resolution of the disputes.

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%.

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.

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.”

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.

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.

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.

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.

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.

In a Chapter 7 Bankruptcy the breathing room provided is not as profound as it is in a Chapter 13 Bankruptcy. This is due to the shorter time period that a Chapter 7 Bankruptcy lasts; typically between 4 and 6 months. However, just as in a Chapter 13, the Automatic Stay applies, and the Student Loan creditor must discontinue all collection attempts against you for the duration of the case. Just the same as a Chapter 13, the Student Loan Debt is non-dischargeable in the Chapter 7.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Bankruptcies resulting from unpaid medical bills affected an estimated 2 million people in the United States during 2013, but people continue to file for bankruptcy every day for a wide variety of financial reasons. That being said, if you are considering filing for bankruptcy, hiring a qualified bankruptcy attorney is the most important step you can take to ensure success. Here’s what you should know about working with a low cost bankruptcy attorney.

Types of Bankruptcy

You may know that there are several types of bankruptcy, and the type you and your bankruptcy attorney decide is best will dictate your financial future and how your assets will be managed from that point forward. Chapter 7 is the most common type of bankruptcy.

Chapter 7 Bankruptcy