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Archive for the ‘Chapter 13 bankruptcy’ Category

Qualifying for Chapter 13

August 10th, 2015 at 7:00 am

Chapter 13 “adjustment of debts” gives you extraordinary advantages over creditors, especially over certain kinds of creditors.  

 

Here’s the sentence we’re exploring today:

You can file a Chapter 13 case if 1) you are “an individual,” 2) you have “regular income,” and 3) the amount of your debts does not exceed the legal limits.

Chapter 13

Filing a Chapter 13 case gives you extraordinary power over particular kinds of creditors. Here’s a sampling of what it can do:

  • You may qualify for a vehicle loan cramdown, enabling you to significantly lower your monthly vehicle loan payments, avoid having to catch up on any late payments, and greatly reduce how much you pay before the vehicle is yours free and clear.
  • You can catch up on back child and spousal support as your budget allows, without your ex-spouse or support enforcement being allowed to garnish wages and accounts or to suspend your driver’s or occupational licenses.
  • Older income tax debts may be paid pennies on the dollar and the rest written off forever.
  • Newer income tax debts can be paid off over time—over as long as 5 years—without any accruing interest and penalties throughout that time, and without the IRS/state being able to chase you on those debts.
  • You may be able to “strip” your second (or third) mortgage from your home’s title, so you never have to make those monthly payments again, greatly reducing the debt against your home, making keeping the home more sensible for the both for the short term and long.
  • You may write off non-support debts owed to an ex-spouse after paying little or nothing on those debts.

Chapter 13 is for “Individuals” Only

Only “individuals”—human beings—can file a Chapter 13 case, according to the U.S. Bankruptcy Code.

An individual and “such individual’s spouse” may file a joint Chapter 13 case.

Unlike Chapter 7 “liquation” or Chapter 11 “reorganization,” a business entity—a corporation, limited liability company (LLC), or business partnership—cannot file a Chapter 13 case in its own name.

If you are an owner or partial owner of a business that IS in one of these legal forms, you may file a personal Chapter 13 case to deal with the debts—personal and business—on which you are personally liable.  But the business itself cannot file under Chapter 13. It either doesn’t file any bankruptcy case (for example, if it has no assets at all, or if it can continue operating without bankruptcy help), files a Chapter 7 case to liquidate its assets, or files a Chapter 11 case to reorganize under court protection.

If you are an owner or partial owner of a business that IS NOT in one of these legal forms but instead is a “sole proprietorship,” you and your business can file bankruptcy in your name, including under Chapter 13. That’s because there’s no legal separation between your personal and business assets and debts.

You Must Have “Regular Income”

You can’t just be any individual but must be an “individual with regular income.” That phrase is defined in the Bankruptcy Code as one “whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13.”

That definition is not very helpful. How “stable and regular” does your income need to be before it is “sufficiently stable and regular”?  How does a bankruptcy judge make that determination at the beginning of a Chapter 13 case, especially if it’s an income source that has had some irregularities in the past (such as from self-employment)?

The ambiguousness of this definition gives bankruptcy judges lots of flexibility about how they apply this qualification. Most give you the benefit of the doubt at the beginning of the case, giving you the opportunity to make the monthly Chapter 13 plan payments to see if you can establish that your income is “stable and regular” enough. On the other hand, if your income has truly been very inconsistent, you and your attorney may have to fight hard to persuade the judge that your income is steady enough to qualify.

Debt Limits

If you file a Chapter 7 case there is no legal limit on how much debt you can have. But under Chapter 13 there are maximums, separate ones for total secured and total unsecured debts.

Chapter 13 debt limits were imposed back in the late 1970s when the modern Chapter 13 procedure was created.  Congress wanted to restrict this relatively streamlined procedure to relatively simple situations. For people with very large debts, the more elaborate Chapter 11 “reorganization” was considered more appropriate.

Originally the debt limits were $350,000 of secured debts and $100,000 of unsecured debts. In the mid-1990s these limits were raised to $750,000 and $250,000 respectively, with automatic inflation adjustments to be made every 3 years thereafter. The most recent of these adjustments applied to cases filed starting April 1, 2013 and through March 31, 2016, with a secured debt limit of $1,149,525 and unsecured debt limit of $383,175. These limits apply whether the Chapter 13 case is filed by an individual or by an individual and “such individual’s spouse”—they are NOT doubled for a joint case.

Reaching EITHER of the two limits disqualifies you from Chapter 13.

These limits may sound high, and indeed are not a problem for most people who want to file a Chapter 13 case. But be careful because certain kinds of debts can skyrocket and exceed these maximums. For example, a vehicle accident involving serious personal injuries, especially if more than one person was injured, can result in hundreds of thousand dollars of debt shockingly fast. Also, individual liability on business debts can accrue quickly.

Debt Dilemmas: Common Concerns about Chapter 13 Bankruptcy Process

July 10th, 2015 at 7:10 pm

Texas chapter 13 lawyer, Texas chapter 7 attorney, Texas bankruptcy lawyer, There are many options available to Americans who want to resolve their debts, but for those who wish to avoid a mass liquidation of assets, chapter 13 bankruptcy may be the answer. If you are struggling with insurmountable debt, you likely have many questions and concerns about the chapter 13 bankruptcy process.

An experienced bankruptcy attorney can evaluate your situation, address your concerns, and provide recommendations for debt relief. In the meantime, here are three common questions about chapter 13 bankruptcy:

Will I Lose My Property?

Many first-time bankruptcy filers confuse chapter 7 and chapter 13 bankruptcies. Unlike chapter 13, chapter 7 bankruptcy involves liquidating assets to pay creditors. However, chapter 13 filers can keep their assets and instead pay debts through a structured repayment plan, according to Uscourts.gov.

What If I Cannot Keep up with My Payments?

Chapter 13 works by restructuring your debt into a more manageable payment plan that takes into account your total debt owed and your ability to pay. In some cases, it is possible to modify a repayment plan; however, debtors who cannot keep up with payments may eventually have to transfer their case to chapter 7 bankruptcy.

How Does Chapter 13 Bankruptcy Affect Tax Debts?

Bankruptcy laws treat credit card bills, mortgages, and similar debts differently than federal and state tax debts. However, chapter 13 bankruptcy places all of these debts – including tax debt – into the applicant’s payment plan.

If you are struggling with debt and want to know if chapter 13 bankruptcy is right for you, contact the Law Offices of Chance M. McGhee. With more than two decades of experience as a skilled San Antonio bankruptcy lawyer, Mr. McGhee has the resources to guide you through the bankruptcy process. Call our office today for a free consultation at 210-342-3400.

Benefits of Hiring a Bankruptcy Attorney

June 26th, 2015 at 7:03 pm

Texas chapter 7 lawyer, Texas chapter 13 attorney, Texas bankruptcy lawyer, For many Americans, bankruptcy offers a path to a debt-free life and freedom from the harassment of debt-collection agencies. However, the process of filing for bankruptcy is more intricate than most people assume.

Even if you know that you qualify for bankruptcy, the guidance of an experienced bankruptcy attorney may prove invaluable. Here are four reasons why:

1. An attorney can help you determine if filing for bankruptcy is a smart decision.

As Uscourts.gov highlights, a bankruptcy lawyer can assess your situation and help you determine if filing is a smart decision. There may be other ways to manage your debt, such as negotiating with creditors to reduce the amount owed or to establish a reasonable payment plan.

2. An attorney can explain bankruptcy laws.

A bankruptcy attorney can evaluate your case and explain the relevant laws. Different regulations apply to each chapter, and these laws my affect your eligibility.

3. An attorney can help you stop the actions of debt-collection agencies.

Dealing with insurmountable debt is hard enough without annoying calls from collection agencies. Your attorney may be able to stop those calls.

4. An attorney can help you avoid mistakes.

First-time filers often make mistakes that delay the bankruptcy process. There may be errors on the paperwork, or the person may break certain laws without knowing – such as excessively using credit before filing. An attorney can make sure you do not compromise your financial or personal interests.

With the right legal support, the process of filing for bankruptcy will become much simpler and easier to manage. A lawyer can guide you through every step – from filing the initial paperwork to managing finances after paying your debts.

If you plan to file for bankruptcy in Texas, contact Chance M. McGhee. Mr. McGhee is a dedicated San Antonio bankruptcy lawyer with more than 20 years of experience. He can evaluate your circumstances to determine if bankruptcy is the best approach to managing your debt. To schedule a consultation, call 210-342-3400.

 

Factors Which May Impact Chapter 13 Bankruptcy Eligibility

May 22nd, 2015 at 12:16 pm

Texas bankruptcy attorney, Texas chapter 13 lawyer, bankruptcy qualifications, Filing for chapter 13 bankruptcy is a smart option for thousands of Americans who struggle to pay their debts. Choosing to file bankruptcy is a major decision, and you should only do so after evaluating alternative options. You should also be aware of the bankruptcy qualifications that apply when attempting to file for chapter 13:

Personal Income

According to Uscourts.gov, personal income is the first criteria when filing for chapter 13 bankruptcy. Proof of a stable income is essential.

Remember that chapter 13 differs from other forms of bankruptcy in that it is not an outright dismissal or liquidation of debts. Instead, this chapter offers the option to restructure and pay off debts over time. This is only possible when the filer has a stable income. The length of the payment plan depends on how the filer’s income compares to the state median.

Total Debt

There is a limit to how much debt you can have when filing for chapter 13 bankruptcy. The current maximum for unsecured debt is $383,175, and the filer may have no more than $1,149,525 in secured debt. These amounts can shift based on the consumer price index.

Previous Dismissal

If your request for chapter 13 bankruptcy has been dismissed previously, you will not only be ineligible to apply for chapter 13, but you will also be unable to file for other chapters for a period of 180 days. Grounds for dismissal include failure to appear at hearings or violating court orders.

Attorney Chance M. McGhee is a dedicated San Antonio bankruptcy lawyer with more than 20 years of experience. He can help you understand your debt relief options and decide if filing for chapter 13 bankruptcy is a smart decision in your particular situation. Contact the Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.

Bankruptcy Qualifications: Can You File for Bankruptcy Twice?

May 8th, 2015 at 8:17 pm

Texas chapter 7 lawyer, Texas chapter 13 attorney, Texas bankruptcy lawyer,Provided that you qualify for bankruptcy, it is likely that you will only apply once in your life. If everything pans out well, the process should set you on a more financially healthy course. However, whether due to a serious injury, loss of income, or another financial hardship, some people may find themselves considering bankruptcy a second time.

Is There a Limit to the Number of Times You Can File for Bankruptcy?

For the most part, you may file for bankruptcy as many times as you wish — although this does not imply that you should. Applying for bankruptcy too soon after the first may void your ability to discharge your debts, according to the Federal Trade Commission. This is critical because, in many cases, the purpose of bankruptcy is to discharge debt to make your finances more manageable.

The amount of time you should wait before filing a second time largely depends on whether you are filing for chapter 7 or chapter 13. After applying for chapter 7 bankruptcy, you must wait eight years until applying for the same chapter again. This differs from chapter 13, for which the wait period is only two years.

The time period between your first bankruptcy and hypothetical second begins on the day you filed the first bankruptcy. You should only consider a second bankruptcy after researching other options and consulting a bankruptcy attorney.

Filing under a Different Chapter the Second Time

Regardless of your first bankruptcy, you are not obligated to file under the same chapter during subsequent filings. However, changing the type of bankruptcy you file may affect the wait period. If you file for chapter 7 first, you must wait four years to file for chapter 13. For the converse, the waiting period is six years, provided that you have not paid off all unsecured debt. It is also possible to apply sooner if you have made regular payments for more than half of the debt owed, and you can show that a chapter 7 discharge is necessary to gain control of your finances.

To speak with a San Antonio bankruptcy attorney about filing for bankruptcy, either the first time or the second, contact the Law Offices of Chance M. McGhee for a free consultation at 210-342-3400.

The Importance of Following Bankruptcy Laws

April 3rd, 2015 at 8:13 pm

Texas bankruptcy attorney, Texas chapter 7 lawyer, Texas chapter 13 attorney, bankruptcy fraud, Filing for bankruptcy should not feel like an admission of guilt or defeat.  Chapter 7 and chapter 13 bankruptcies can help people stabilize their finances and work toward a debt-free life.

Bankruptcy laws are complex, which is why the guidance of an experienced bankruptcy attorney may prove invaluable. A lawyer who has handled cases similar to yours can provide advice and potentially expedite the process. You also may be more likely to avoid mistakes that could compromise your interests.

Although bankruptcy is a smart option for many, not understanding the legalities can make the process more difficult. One recent story demonstrates how not following bankruptcy laws can lead to trouble.

Judge Says Houston-Based Realty Company Circumvented Bankruptcy Laws

According to the Houston Business Journal, American Spectrum Realty, a self-storage space and assisted living center company, allegedly filed separate bankruptcy petitions in two different states. The overseeing judge ruled this action as an intentional means of circumventing specific aspects of bankruptcy law.

Following Bankruptcy Laws the Right Way

Different forms of bankruptcy come with specific regulations and requirements. Two of the most popular forms, chapter 7 and chapter 13, differ in how they resolve debt. The former is a more straightforward liquidation and dismissal of debt while the latter creates a repayment plan to help the debtor manage his or her finances.

No matter which form of bankruptcy you file, you must follow bankruptcy laws. An attorney can help you avoid critical mistakes while also helping you compare the options.

Consult a Bankruptcy Lawyer in San Antonio, Texas

If you are struggling with debt as either an individual or a business, and would like to speak with an experienced San Antonio bankruptcy lawyer, contact the Law Offices of Chance M. McGhee. Call us today at 210-342-3400 to schedule a free initial consultation.

Foreclosure Defense: Saving Your Home

March 16th, 2015 at 2:17 pm

Texas foreclosure attorney, Texas bankruptcy lawyer, San Antonio foreclosure lawyer,Although the housing market is showing some signs of recovery, millions of Americans still struggle with their monthly mortgage payments. Texas is a non-judicial foreclosure state, so in most cases, the lender does not need a court order to foreclose on a residential mortgage. As a result, most Texas foreclosures are processed in under a month, leaving limited time for foreclosure defense.

Most South Texas families have very little savings, so if they fall even one or two months behind on their mortgage, it can be very difficult to catch up. Although most lenders participate in government-sponsored loan modification programs, such assistance may not come in time to save your house, and may not even come at all.

What Bankruptcy Can Do

If you received a foreclosure notice, chapter 7 or chapter 13 bankruptcy offers both short- and long-term solutions to your debt problems.

  • Automatic Stay: The instant you file, Section 362 generally goes into effect. Lenders cannot take any adverse action against you without special permission from the bankruptcy court. Even if your property is scheduled to be auctioned off, a bankruptcy filing can save your home. You do not have to prove anything in court, such as fraud or unfair lending practices. All you have to do is file.
  • Protected Repayment Period: In a chapter 13, you have either three or five years to catch up on your mortgage payments. The lender must accept your terms, as long as the trustee approves your repayment plan. In nearly all cases, the automatic stay remains in effect through the entire repayment period.
  • Lien Stripping: You may be able to remove a second mortgage. For example, a number of people financed a residence with an 80/20 mortgage. If your home’s value has dropped below a certain threshold, the bankruptcy court may classify a second mortgage as “unsecured” and discharge it.
  • Cram Down: In some instances, you may be able to reduce the amount of debt to the fair market value of the asset. So, if you owe $200,000 on a home that is only worth $150,000, the judge may discharge a portion of the debt.

If the bank still tries to take your home, the judge may refer the matter to mediation, where you will have the opportunity to obtain a loan modification.

Bankruptcy can help you stay in your family home. If you are struggling with unpaid debt, reach out to an experienced San Antonio bankruptcy lawyer today. Call The Law Offices of Chance M. McGhee at 210-342-8400.

RadioShack Receives Large Bankruptcy Loan Offer

January 18th, 2015 at 1:33 pm

RadioShack bankruptcy, San Antonio bankruptcy lawyerFor the last several months, news stories across the nation have profiled RadioShack’s financial troubles. The electronics retailer has struggled to remain relevant and compete with chains like BestBuy, and over the last few years, RadioShack has reported significant losses.

Recent news has suggested that despite RadioShack’s insistence that it does not intend to file for bankruptcy, the company might have to make some drastic financial choices in the coming year. How does a business understand when it is appropriate to file for bankruptcy? Much of it depends on understanding industry trends and knowing how different forms of bankruptcy affect a business.

For businesses considering bankruptcy, discussing the financial state of the company with a bankruptcy attorney may be helpful. Depending on the options available, bankruptcy can be either a positive or negative choice.

Is RadioShack in Trouble?

There is no doubt that RadioShack is struggling to compete with larger retailers. Even small stores for cellphone companies are taking revenue from RadioShack. According to The Wall Street Journal, Salus Capital Partners has offered a $500 million bankruptcy loan to the electronics supply chain. With continuous losses over the last few years, accepting this loan might be a smart move.

Bankruptcy for Smaller Businesses

While corporations like RadioShack will likely choose to file chapter 11 bankruptcy, most small businesses will end up filing either chapter 7 or 13 bankruptcy. The decision depends on a number of different factors including the company’s intentions after filing.

Chapter 7 offers several advantages for both sole proprietorships and partnerships. Since chapter 7 includes a very direct form of clearing debts, it is popular among businesses that want to liquidate and close down. While there are some ways that an owner can retain possession of assets and remain in business, such aspirations are more suitable for chapter 13.

Chapter 13 bankruptcy is not available to partnerships and corporations. The owner of the company will hang on to any vital business assets while restructuring debt through a payment plan. It is important to keep in mind that the business as an entity is not filing for chapter 13; rather, the owner is filing.

Bankruptcy Lawyer in San Antonio Texas

If you are a business owner considering bankruptcy, the guidance of an experienced San Antonio bankruptcy attorney may prove invaluable. Contact the Law Offices of Chance M. McGhee at 210-342-3400 for a free initial consultation.

 

Tips for Homeowners Who Are Struggling with Mortgage Payment Difficulties

December 22nd, 2014 at 8:48 pm

San Antonio bankruptcy attorney, Texas forclosure lawyer, Owning a home is one of life’s great accomplishments, and mortgages help people achieve this dream. Home loans, however, can become burdensome when an individual or family enters difficult financial circumstances.

Some homeowners face bankruptcy or foreclosure as a consequence of struggling to meet mortgage payments. Fortunately, experiencing tough economic challenges does not always mean debtors will lose their homes or declare bankruptcy. Here are some helpful tips when monthly payments become difficult to afford:

1. Review Your Mortgage and Contact Your Loan Provider

Understanding the type of mortgage a person has is key to responsible financial planning. According to Bankrate.com, there are three main types of mortgages: fixed-rate, adjustable rate, and a hybrid between the two. These categories may influence the best approach to debt management.

The first step for tackling payment challenges is to call the bank or loan provider. They will be able to review the details of the loan and possibly offer suitable options to make payments more manageable.

2. Know What to Do If You Fall Behind on Payments

Many homeowners may find themselves one, two, or more payments behind on a mortgage. While this is never a great sign, it does not mean all hope is lost. Depending on one’s financial situation, the details of the mortgage, and the current balance, there may be several options available to reestablish financial stability.

If you are struggling with mortgage debt, bankruptcy may be a viable option. Although this is a serious choice, it is often a smart decision.

An experienced Texas bankruptcy lawyer can help you assess the options and determine if filing bankruptcy is an intelligent move. This is not the only option, which is why it is so important to seek professional advice. To schedule a consultation with a bankruptcy lawyer in Texas, contact the Law Office of Chance McGhee today at 210-342-3400 for a free consultation.

What Does Bankruptcy Really Do to Your Credit Score?

December 9th, 2014 at 9:30 am

bankruptcy credit score, San Antonio bankruptcy lawyerMany Americans have a limited understanding of bankruptcy and credit in general. For this reason, financial crises can seem overwhelming and hopeless.

One topic that concerns many debtors who are considering bankruptcy is how the process will affect their credit scores. While bankruptcy will most likely have some impact on a credit score, debtors should not view this option as a financial death sentence.

One of the truest statements about bankruptcy is that it is different for everyone. Sometimes, it is the most appropriate way out of debt; other times, there may more effective alternatives. A helpful way to get a firm understanding of one’s financial situation is to sit down with a legal expert who can offer a firm understanding of the law surrounding debt relief options.

Yes, Bankruptcy Will Harm Your Credit Score

There is no way around the truth. Depending on the type of bankruptcy a debtor files, a credit score will likely drop as much as 220 points, according to Money Crashers. The bankruptcy also remains on a credit report for as long as a decade. This might dissuade some from considering bankruptcy as an option.

Bankruptcy can be a double-edged sword—a last resort for many Americans. While it is true that bankruptcy will have a lasting mark on a credit report, it should prompt one of two responses: either an acknowledgment that one’s financial situation is dire enough that the credit score dip is insignificant when looking at the bigger picture, or a realization that the negative mark is not worth the risk and that other options could be viable.

Bankruptcy, however, does not take one’s credit score out of the picture. After people go through bankruptcy, whether it is Chapter 7 or Chapter 13, their eyes should be set on bringing their score up immediately. While the relief in debt might offer some room to breathe, it is better to view it as a chance to hit the reset button with the intention to build it up again.

If you are struggling financially and thinking bankruptcy might be the answer for you, it can be beneficial to sit down with a Texas bankruptcy lawyer to discuss your options. At the Law Offices of Chance M. McGhee, our passion is working with clients to find effective solutions for their debt problems. Call us today at 210-342-3400 for a free consultation.

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