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Timing Your Bankruptcy

July 13th, 2020 at 7:00 am

The timing of your bankruptcy case is important, sometimes extremely important. It can determine if your case is as successful as it can be.

 

Five weeks ago we started a series on why you should get legal advice from a bankruptcy lawyer. We’ve also been making a point of showing why it’s smart to do so early, when you start considering bankruptcy.

It’s super important to get this legal advice so that you can learn:

  1. if bankruptcy is the best option for you, and how to pursue other alternatives
  2. how Chapter 7, 11, 12, and 13 work, and whether either are right for you
  3. what actions you should take to position yourself, whether you’re possibly or definitely filing bankruptcy
  4. what you should avoid doing
  5. the best timing for your bankruptcy filing

If you want to look back, we covered #1 and #2 five weeks ago. The next four blog posts got into different aspects of what you should and shouldn’t be doing before filing (#3 and #4). These included keeping assets (4 weeks ago), taking on debt (3 weeks ago), filing income tax returns and paying the taxes (2 weeks ago), and paying child/spousal support (1 week ago).

Today we start on how to best time the filing of your bankruptcy case.

Bankruptcy Timing

Frankly, this is a huge topic. That’s because so much our financial lives are tied to time. One day you don’t owe a debt. The next day you go to a medical appointment and immediately owe a debt to the doctor’s office. You get the bill with a due date (after insurance pays a portion, if you’re fortunate enough to have insurance). If you can’t pay it by the due date, the debt goes into collections at some point in time. Then at some point you get sued, which turns—a certain amount of time later—into a judgment against you. After a short period of time (usually), that turns into a garnishment of your paycheck. All of these steps involve timing, with deadlines and time-based events.

Similarly, bankruptcy involves many issues of timing. Using the example above, filing bankruptcy stops the debt collection process wherever it is at the time.  If a lawsuit has been filed by the collector but no judgment yet entered, bankruptcy stops the entry of a judgment. If a judgment has been entered but no garnishment yet ordered, bankruptcy filing at that time prevents the garnishment. If your wages are the midst of being garnished, bankruptcy stops the garnishment. Whether it stops your current paycheck from being garnished or the next one, it all depends on timing.

Important Examples of Good (and Bad) Timing

The timing of your bankruptcy filing can affect all of the following. Whether:

  1. the bankruptcy case includes recent or ongoing debts or not
  2. you have to pay an income tax in full, in part, or not at all
  3. you must pay interest on an income tax because of a tax lien
  4. you can discharge (legally write off) a credit card debt, or a portion of it
  5. you can discharge a student loan debt
  6. you qualify for a vehicle loan cramdown—reducing monthly payments, interest rate, and total debt—and still keep the vehicle
  7. you qualify for a personal property collateral cramdown—paying less—and still keep the collateral
  8. you stop the repossession of your vehicle in time, or lose it to the vehicle loan creditor
  9. you prevent the foreclosure of your home in time, enabling you to catch up over time
  10. you get more time to sell your home, including years from now
  11. you qualify for a Chapter 7 case under the “means test,” or must instead file under Chapter 13
  12. you qualify for a 3-year Chapter 13 payment plan or instead must pay for 5 years
  13. your sale or gifting an asset is a “fraudulent transfer
  14. your payment to a friendly creditor is a “preference
  15. you can keep all of your assets if you’ve moved from one state to another in the past several years

Conclusion

Just looking down this list gives you a better idea how important the timing of your bankruptcy can be. We’ll be covering these timing issues one-by-one in our next blog posts. There’s a good chance that one, or even a number of them, apply to you. If any do, and you need to know more about it, please call us. We would appreciate being your bankruptcy lawyers, helping you fully  benefit from the law.

 

The Best Bankruptcy Advice: Get Legal Advice

June 8th, 2020 at 7:00 am

Businesses considering bankruptcy get intense legal advice before filing. You would also be smart to get solid advice to make a good decision. 


What Businesses Do Before Filing Bankruptcy

The following are just a few of the companies which have filed business bankruptcy in the last couple months:

  • Pier 1 Imports
  • CMX Cinemas
  • J. Crew
  • Gold’s Gym
  • Neiman Marcus
  • JC Penney
  • Hertz
  • Tuesday Morning

Some of these companies will completely go out of business, some will continue on after a financial restructuring.

What they all have in common is that they got lots of legal advice before deciding to file bankruptcy. They likely got that advice over the course of many months. They likely used that advice to try to avoid entering into bankruptcy, take steps to position themselves for filing, and then to time the filing as well as possible.

If Bankruptcy Is Even a Possibility, Get Immediate Legal Advice

That likely applies to you if you are reading this. If there is even just a chance you need to file bankruptcy, you should get legal advice for similar reasons. You would be wise to get legal advice to find out:

  1. if bankruptcy is the best option for you, and how to pursue other alternatives
  2. how Chapter 7, 11, 12, and 13 work, and whether either are right for you
  3. what actions you should take to position yourself for either a possible or definite filing
  4. what you should avoid doing
  5. the best timing for your bankruptcy filing

1. Bankruptcy or Other Alternatives?

Bankruptcy may feel like an option of absolutely last resort. Sure, it’s something to avoid when possible. But that doesn’t mean you should avoid finding out about it.

Bankruptcy is a tool. It’s a legal tool provided for in the U.S. Constitution (Article I, Section 8, Clause 4) and federal law to provide you financial relief.

It may be right for you, either now or at some point in the near future. Or it may not be. You would feel better knowing one way or the other.

2. The Different Chapters of Bankruptcy

Chapters 7, 11, 12, and 13 are each very different. They are designed for very different circumstances.

If you own a business, generally Chapter 7 is for closing down your business, Chapter 11 is for reorganizing it. Chapter 12 is essentially a Chapter 11 for farmers and fishermen.

If you are instead of consumer debtor your two options are usually either Chapter 7 or Chapter 13.

Chapter 7 is sometimes called “straight bankruptcy.” It takes only 3-4 months, usually you keep what you own and can “discharge” (legally write off) most debts. But Chapter 7 is very limited in how it deals with certain important debts. With secured debts (home mortgage and vehicle loans) you either keep current or lose the house/vehicle. Also, Chapter 7 doesn’t help much with debts that you can’t discharge, like recent income taxes, child/spousal support, and such.

Chapter 13 “adjustment of debts” is much more flexible, especially with secured and other special debts. But it takes much longer—usually 3 to 5 years. That extra time is what provides much of the flexibility. You and your bankruptcy lawyer put together a payment plan, mostly for dealing with the secured and special debts. There’s a plan approval process and then you pay according to the plan for as long as it lasts. Chapter 13 can often give you tremendous power over your secured and special debts.

In relatively straightforward situations, Chapter 7 provides immediate and lasting financial relief. In situations with more diverse debts, Chapter 13 also provides immediate, and more flexible and powerful relief with those debts especially.

Interim Conclusion

More on what to do, what not to do, and the timing of bankruptcy coming up in our next blog posts. In the meantime…

As bankruptcy lawyers we are genuinely in this to help people. We love it when we can provide real solutions for our clients’ serious financial dilemmas. So it’s sad when people come in to see us who would have significantly benefitted from coming in earlier.

Please get in touch with your bankruptcy lawyer as soon as bankruptcy becomes a possibility. Doing so will give you the peace of mind that comes from

  • knowing that you have some really helpful options, often better than you thought
  • learning how to either avoid bankruptcy or position yourself in the best way for it
  • establishing a trusting relationship with your bankruptcy lawyer
  • knowing that you are avoiding taking seemingly sensible but actually unwise actions
  • taking charge of your life instead of living in fear

There is no downside for getting legal advice when you’re hurting financially. The initial consultations are almost always free. It may well be the single best decision you could make now.

 

The Pursuit of Happiness this 4th of July

July 3rd, 2017 at 7:00 am

This 4th of July follow the Declaration of Independence and claim your right to “Life, Liberty and the pursuit of Happiness.”


Your Life in Mid-2017

If you’re reading this on the Fourth of July weekend there’s a good chance you have some serious financial problems. Your debts may be overwhelming you. You’re worrying about them all the time.

Odds are you’ve probably been trying to improve your situation for a long time, maybe even for years. It’s really adversely affecting your life. It’s dragging down your personal relationships. You’re worried that the anxiety is harming your health, and then you worry about that, too! It’s hard to feel good about yourself with this all never far from your mind. You aren’t often relaxed or happy.

The Declaration of Independence is now 241 years old. It states at the beginning of the Preamble:  

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Isn’t it time to follow this self-evident truth: you’re in a vicious cycle and need to find a way to a better life, financial liberty, and the freedom to pursue your life dreams?  

Happiness to Pursue

You’d like to be able to afford what you need, what are important to you. You’d like to not be anxious about money all the time. You’d like feel hopeful, to have a future worth looking forward to.

You’d like financial freedom.

The First Step

It’s often true that the first step is the hardest. We often figure that solving a problem will be harder than it actually ends up being. Sometimes we’re pleasantly surprised after we take the first step that it’s not as hard as we’d thought. Then afterwards we wish we’d had the nerve to take that first step much earlier. We kick ourselves about how much grief we could have avoided.

So what’s the simple but crucial step here? What do you need to do avoid future unnecessary grief?

Simply find out what your legal options are about your debts.

Move from Fear to Realistic Options

You discover your options by seeing a lawyer who helps people like you solve their consumer and/or business debt problems.

This may be easier than you think. That’s because asking for this kind of help is usually free, at least to get started. Most lawyers who help people with their debts don’t charge for their initial consultation with you.

But Don’t You Just Get What You Pay For—Nothing!?

When you go to the right lawyer you will get valuable information and advice at the free initial consultation. At this meeting you will have the opportunity to tell the lawyer about your situation, your concerns, and your goals. The lawyer will usually outline your most likely legal options, along with their major advantages and disadvantages. This initial meeting is usually extremely valuable.

So why do most lawyers who help consumers and small businesses with debt problems not charge for their initial meeting?

First, let’s admit right from the start that it’s partly a marketing tactic. A lawyer naturally does hope that once you invest the time to meet with him or her you will more likely hire that lawyer if you decide to use a lawyer.

Second, when you’re in financial trouble you likely can’t spare the money to pay for shopping for a lawyer. So most bankruptcy lawyers recognize that they can’t charge for initial consultations. They need to give you a chance to check them out and get advice from them.

Third, most bankruptcy lawyers who serve debtors are genuinely compassionate folk. Most chose to specialize in this area of law for that reason. So they actually do care about you and want to help you have a happier life.

So it’s only sensible to take advantage of their free offer.

Be Selective

At your initial meeting with a lawyer, you’re “just shopping” but doing so seriously. It’s a big investment of your time, so learn as much as you can.

Of course you have absolutely no obligation to continue working with that lawyer. You are asking for information and advice, and maybe looking for a lawyer to help you.

So during and after the initial meeting ask yourself the following questions:

  • Did the lawyer listen carefully to you and get all the necessary information about you and your finances?
  • Did he or she present your options clearly? Did you have a chance to ask questions about them that were answered in an understandable way?
  • Do any of the options sound practical and worth doing?
  • Was the lawyer considerate towards you, respectful, help you feel comfortable?
  • Was the lawyer knowledgeable but able to communicate in a way that made sense to you?
  • Were you comfortable with him or her? Do you feel like you could trust him or her? Were you and the lawyer a good fit?

Don’t Bankruptcy Lawyers Always Recommend Filing Bankruptcy?

No. That would go against their ethical and legal obligations to you.

Lawyers are strictly required to serve you. It is illegal for them to pressure you into any option at all. Their role is to advise you of your options, and your advantages and disadvantages as to each one. They must provide this advice without considering their financial self-interest.

If they do anything different they can be sued for malpractice for giving bad advice (as lawyers quite regularly are). Or they could lose their law license, and thus their livelihood.

This all true even as to a free initial consultation. When you have a lawyer-client relationship, it doesn’t matter what your financial arrangement is with the lawyer.

Crucially, a lawyer’s job is to lay out the options so that YOU can make an informed decision. The lawyer doesn’t tell you what to do or make you do anything. That’s your choice. Sure, the lawyer’s job is to advise you, and usually to make recommendations based on your circumstances. But it’s not to make decisions for you or to make you do anything.

If the lawyer you meet seems to be putting any uncomfortable pressure on you, find another one who respects your appropriate role as the decision-maker.

Take that First Step

On the 5th of July call a lawyer to set up a consultation meeting. And go to that meeting. You will almost certainly come away from it much, much better informed about your options.

You will very likely be able to get out of your vicious cycle and find a way to a better life. You’ll finally get the freedom to pursue happiness.

 

The Real Number One Reason for Bankruptcy Filings

February 18th, 2015 at 12:13 pm

medical care and bankruptcy, San Antonio bankruptcy lawyerHistorically, filing for bankruptcy was typically not considered an option for many people who found themselves struggling with mounting and uncontrollable debt. The stigma attached to bankruptcy was one of shame and failure. However, over the past decade or so, that stigma began to fade as many people realized that bankruptcy was often the only solution to the financial crisis they found themselves in.

In 2012, over 1.2 million people in this country filed for bankruptcy. Prior studies have shown that the leading causes of bankruptcy are medical expenses, unemployment, unexpected life events, and credit card debt.

But just how much of role do medical expenses play in causing people to have to file for bankruptcy? Is it actually one of the leading reasons as we have been led to believe? Many analysts and studies point to the high price of medical care–not only for people who have no medical insurance–but also for people who do have medical coverage as the number one leading cause. It has been cited as the cause of sixty percent of bankruptcy filings each year. However, this statistic was actually garnered from a 2007 Harvard University study. A recent study reached different a conclusion.

The Center for Consumer Recovery analyzed over 3,000 bankruptcies which were filed in 2012. The research team looked over each bankruptcy petition and credit report of each participant, as well as conducted an interview with each one. They found that medical expenses were not the leading cause of the bankruptcy. Instead, in 78 percent of the study cases, it was debt litigation that resulted in the bankruptcy filing.

Three-fourths of participants shared the common experiences of harassment form collection agencies and debt collection companies, including threats of lawsuits. It was these threats and harassment that forced the decision to finally file for bankruptcy.

If you are being threatened and harassed by creditors, bankruptcy may be the best option for you. Contact an experienced bankruptcy lawyer in San Antonio today for a free consultation.

Debt Coping: What to Do When a Child Passes Away

March 31st, 2014 at 12:45 pm

student loan debt, San Antonio bankruptcy lawyer, San Antonio bankruptcy attorney, Texas lawyerGoing through the process of grieving a child is devastating for any parent. However it can be even more challenging to move on when private student loan debt follows that individual after the child has passed away.

While most federal student loan debt is wiped out when a person passes away, private lenders may try to go after family members. If you are trying to cope with this situation, you may have a way out: bankruptcy.

Just ask Francisco Reynoso of California. His son died in a car accident in 2008, but Reynoso was on the line for six figures of student loan debt for which he had cosigned. With an income of just $21,000 per year, Reynoso was trying to grieve the loss of his child while avoid collection calls and demands from private lenders.

Some of the debt had been transferred to private investors outside of the original lender, making it difficult to identify which company was connected with each debt. Reynoso wasn’t even sure whether it was possible to negotiate settlements because he did not know who had taken over the loans.

Ultimately, he felt backed into a corner, unable to meet the payment demands. He decided to go through bankruptcy so that he could finally wave goodbye to the loans and lenders and instead focus on grieving his son and healing.

Parents taking on co-signing responsibilities are likely not concerned about having to make these massive payments in the future because they expect the child to get a job after graduation, rather than expecting them to pass away.

A child who passes away may leave behind big private student loan debt that is impossible for parents to pay off. In these cases, bankruptcy can provide a way out and a fresh start. If you would like to know how the process can help you, contact a Texas bankruptcy attorney today.

What is the Texas Homestead Exemption?

January 12th, 2014 at 4:27 pm

illinois texas homestead exemption lawyerBefore heading into a personal bankruptcy, it is helpful to know as much as possible about federal and state laws and rules affecting your case. Texas has very unique homestead laws that you should know about before petitioning for bankruptcy. If you are thinking about bankruptcy as an option, talking over your situation with an attorney could be extremely helpful for getting your questions answered and putting you at ease.

If you file for bankruptcy, you can protect the total value of your home under this exemption. It’s important to note that there are several critical stipulations in order for a homeowner to be eligible for this exemption. A rural homestead for the head of the family cannot be more than 200 acres including the space the property is located on and a single adult cannot claim any more than 100 acres. In an urban area, the space is limited to ten acres.

In Texas, you are able to choose between the federal bankruptcy homestead exemption or the state exemption, but you cannot flip back and forth between these two systems. You have to elect whether to move forward with state exemptions or federal exemptions for your whole case. If you decide to use the Texas homestead exemption, you have to submit a form to the County Recorder’s Office prior to filing for bankruptcy.

You will be looking for a form titled “Application for Residence Homestead Exemption” and you might need to contact your local appraisal district for more specific information. If you don’t file this paperwork on your own, the court can do it for you, but bear in mind that they will charge you the fees and expenses for doing so.

If you are considering bankruptcy in Texas and would like more of your questions answered about property exemption, contact a San Antonio bankruptcy attorney today for a consultation.

State of Economy in Texas Remains Political Issue

November 21st, 2013 at 2:08 pm

With the gubernatorial race upon us, and local elections being decided throughout the country, the public will surely continue to be inundated with political ad campaigns and candidates’ appearances throughout the region. One of the most discussed issues involves Texas’ economy, and the correlated issues of unemployment rates and the public debt.

 According to My San Antonio, Attorney General Greg Abbott, who is running for the 2014 GOP gubernatorial nomination, stated during a recent campaign appearance that Texas’ debt ranks as the second highest among large states in the U.S., while San Antonio holds the highest debt of any city within the state. While this state of affairs is concerning, especially considering the recent actions of cities in financial crisis in other parts of the country, perhaps the public can find some reassurance in the fact that the elections will call attention to these issues and potentially produce proposed resolutions.

Unfortunately, considering the state of economic affairs in the state of Texas, it is not surprising that the citizens of Texas also experience financial strain. While the proposition of filing municipal bankruptcy is something that is generally considered as a last resort and is something to be avoided, individuals do not always have other feasible options. However, bankruptcy should not always be viewed as a negative process, as bankruptcy can offer not only debt relief for those who file, but a fresh start at a positive financial future.

Individuals generally file either a Chapter 7 or a Chapter 13 bankruptcy petition, depending on their intentions and the facts and circumstances surrounding their particular situation.  In a Chapter 7 bankruptcy, the petitioner obtains a discharge of his or her debt in exchange for surrendering certain items of property that will later be sold to satisfy their debt.  The bankruptcy code allows for certain exemptions that can be used to protect some items of the petitioner’s property from being surrendered.  In a Chapter 13 bankruptcy, the petitioner agrees to a repayment plan which provides for the petitioner’s debt to be repaid over a period of time, which can also include avoiding foreclosure by entering into a payment plan for the amount that is past due on the petitioner’s mortgage.  The petitioner’s specific repayment plan will depend on various factors, including income, total amount of debt, and types and the extent of other property they own.

The bankruptcy process can be overwhelming and complicated.  An experienced bankruptcy attorney in San Antonio can help guide you through the process and offer assurance in a stressful time.  Contact us today to discuss your options in filing for bankruptcy, and for advice in how to seek relief from financial difficulty.

 

A New Baby Could be a Good Time for Financial Fresh-Start

November 4th, 2013 at 11:01 am

texas-bankruptcy-fresh-startThere are usually all kinds of planning and important decisions to be made when a couple has a new baby on the way.  And many of those plans are expensive ones.  According to the U.S. Department of Agriculture (USDA), it costs a middle-income family almost a quarter of a million dollars to raise that child from infancy to age 18 – and that’s excluding college tuition.

The UDSA’s new report breaks down as follows:

  • Families earning between $60,640 and $105,000 (pretax) will spend $241,080.
  • Families earning less than $60,640 will spend $173,490.
  • Families earning more than $105,000 will spend $399,780.

The report cites the two largest expenses as housing (33 percent) and child care/education (23 percent).  The third-highest expense is food (18 percent). Although parents may be tempted to overspend in other areas, none of these three categories are arbitrary ones.

For parents already struggling with significant debt, the increase costs may be overwhelming. For example, before baby, both parents are working full-time yet still unable to keep up with debt obligations every month. After the baby is born, a good portion of that net income is drastically reduced and paid for daycare tuition.

According to a study done by the Center for American Progress, in 2010, among families with children 44.8 percent were headed by two working parents and another 26.1 percent were headed by a single working parent. A good quality, licensed daycare can cost more per year than college tuition.

This may just be the time to consider whether or not filing for bankruptcy protection may be the best option in being able to handle all the new and unforeseen expenses that arrive along with the new baby. Contact an experienced San Antonio, Texas bankruptcy lawyer today to find out what your options are and why this may be the best financial decision for you and your new family.

What Does an IRS Tax Levy Mean in Texas?

October 30th, 2013 at 10:19 am

san-antonio-irs-tax-levySince the economy has taken a turn for the worse, the IRS has be relatively aggressive in coming after income tax debt. If you are being contacted by the IRS about existing tax debt and you are feeling overwhelmed with your finances, you need the advice of a San Antonio bankruptcy attorney.

The IRS can use levies to pay your taxes if you do not make payments or arrangements for payments to cover a tax debt. The IRS can take and sell any type of personal property that you own or have interest in. This includes the cash loan value of your life insurance policy, commissions, your wages, bank accounts, licenses, rental income, dividends, and retirement accounts. The IRS may also seize and sell property such as houses, boats or cars.

The tax levy can be completed after the IRS assessed the tax and provided you with a Notice and Demand for Payment, you refused to pay the tax or ignored the notice, and you received a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” Generally, you will receive this last piece of information about 30 days before the levy. Taxes are extremely complicated and contacting the IRS may not clear up your questions. This is a sign to reach out to a bankruptcy lawyer.

If you are being contacted by the IRS about an impending levy, now is the time to act. The automatic stay provision of bankruptcy will stall all attempts by creditors to collect on a debt. Filing for bankruptcy is one way to stop the attempt to levy you as a result of an outstanding tax debt.

You should only work with a professional who understands the challenges of an IRS tax levy. If you’re ready to talk about bankruptcy and your opportunity to get a fresh start in life, contact an experienced Texas bankruptcy attorney today.

Which First, Divorce or Bankruptcy?

September 29th, 2013 at 8:00 am

courtMoney is a major source of tension for any marriage.  It may not be the cause of a divorce but financial arguments can add to the stress on any couple.  Especially if that pressure is compounded by bills that are not being paid and calls from creditors.  As much as financial troubles can be the cause of divorce, divorce can also be the cause of bankruptcy.

Given this close relationship to two of the most stressful events that might occur in life, it is important to plan ahead.  The first consideration is which you should do first, file for divorce or for bankruptcy.

The fees for filing for bankruptcy are the same regardless if you apply separately or together.  That means you can potentially save money if you file with your soon to be ex-spouse.  It should be mentioned to your bankruptcy attorney that you will divorce soon, that way there is no conflict of interest.

The next step is to consider what type of bankruptcy to file for, Chapter 7 or Chapter 13.  Since a Chapter 7 bankruptcy means that you sell your property and assets to repay your debts.  This is an easy and quick bankruptcy to complete before divorcing your partner.  Chapter 13 is a long term repayment program.  This would be difficult to complete without your spouse in the same household.  A Chapter 13 bankruptcy should be filed individually after the divorce is finalized.

If you need a restart financially, it makes more sense to file for bankruptcy before filing for divorce.  One of the major sticking points in divorce is the division of property.  By filing jointly, you may be eligible for more exemptions because you are still married.  But assets are not the only thing that gets divided, but debts do too.  If you are looking for a new start both in your finances and your love life, then contact a knowledgeable bankruptcy attorney in San Antonio today.

Call today for a FREE Consultation

210-342-3400

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