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Archive for the ‘chapter 7’ tag

Paying Unpaid Child/Spousal Support before Bankruptcy

July 6th, 2020 at 7:00 am

Before filing bankruptcy, should you pay child/spousal support debt in the meantime? This may depend on whether you file Chapter 7 or 13.


Our last three blog posts have been about what you should and should not do before filing bankruptcy. Three weeks ago we focused on keeping your assets, especially any retirement funds, and collateral, such as home or vehicle. Two weeks we discussed whether to take on more debt, maybe to buy time and not need to file bankruptcy. And last week we looked at whether you should file any unfiled income tax returns, and pay income taxes.

Today the question is whether to pay unpaid child/spousal support before filing bankruptcy. As with all of these issues, there are some general principles worth getting to understand. But everybody’s situation is truly unique. So you really do need the help of an experience bankruptcy lawyer to apply these principles to your personal situation. This blog post can be the first step towards becoming well-informed about your options. It’ll help you ask the right questions so that you can make the best decisions.

Child/Spousal Support Collection

If you haven’t already learned the hard way, the collection of child and spousal support can be extremely aggressive. If you are behind on support, your ex-spouse and the support enforcement agency have tremendous tools to use against you to make you catch up.

In virtually all states an ex-spouse—or the local support enforcement agency—has extraordinary ways to collect unpaid support.  

These include ways of grabbing your money directly. We’re talking garnishing your wages and bank accounts, and grabbing income tax refunds.

But the collection tools also include ways to hurt you so that you’ll be forced to pay. Your ex-spouse and support enforcement can often put liens on your possessions and your real estate. Your ex-spouse/support enforcement might then take these assets to sell and pay the support debt. They can often suspend your driver’s license. This includes a commercial driver’s license, so you can’t work if have a job requiring the license. They can even suspend your professional or occupational license. That could prevent you from legally working in your profession or business as a nurse, doctor, physical therapist, lawyer, realtor, insurance agent, mortgage broker, etc.

On top of all this, you could lose your hunting, fishing, boating and other recreational licenses. You could even be ineligible to receive a U.S. passport.

Bankruptcy Doesn’t Discharge Unpaid Child/Spousal Support

No form of bankruptcy can discharge (legally write off) unpaid child/spousal support. So you might as well prioritize paying the support, right? Maybe.

Stopping Support Collection

Also, Chapter 7 “straight bankruptcy” does not directly stop, or even pause, any of the above forms of support collections. Even more reason to put every dime into catching up on the support, right?

Maybe. But first be aware that Chapter 13 “adjustment of debts” CAN stop the collection of unpaid support. Furthermore, a Chapter 13 official payment plan can give you 3 years, or often as much as 5 years to catch up on any child/spousal support. Under the right circumstances you can be protected from support collection throughout those years of catching up.

So when on the brink of bankruptcy, it might make practical sense to not pay a support payment. It may make sense to pay that unpaid support over time instead. You might need to use your precious money for some other extremely urgent purpose.

This may be sensible if you are currently not being hit with ongoing support collection efforts. It would also be important that you don’t have reason to believe such efforts are imminent. Given how aggressive those efforts can be, this is a delicate calculation.

Determining Whether Chapter 13 Is Right for You

Be aware this particular scenario of not paying support only makes sense if you end up filing under Chapter 13.

As stated above, only Chapter 13 stops the collection of unpaid support arrearage. The more common Chapter 7 type of bankruptcy does not.

(Note that your obligation to pay ongoing monthly support after filing the Chapter 13 case continues. So collection of the ongoing monthly support can continue.)

Only Chapter 13 gives you a protected and extended method of catching up on your unpaid support. Chapter 7 leaves you at the mercy of your ex-spouse/the support enforcement agency, and their collection tools listed above.

The decision whether to file a Chapter 7 vs. Chapter 13 one is always a multi-faceted one. The Chapter 7 procedure itself is usually less expensive and takes much less time. But Chapter 13 gives you much stronger tools, not just with unpaid child/spousal support. If you’re behind on a mortgage, are in a difficult vehicle loan, owe income or property taxes, and many other challenging situations, Chapter 13 can work legal miracles.

Whether these powerful tools are worth the extra money and time is a multi-faceted decision. It’s one that definitely requires legal advice.

An Urgent Decision

By its very nature, whether or not to pay a child/spousal support payment is a very urgent decision. If you are in the midst of support collection efforts, those efforts are likely causing you significant financial pain. If that’s not happening yet, they can occur at virtually any time. You have to make some big decisions quickly.

The initial meeting with a bankruptcy lawyer is usually free. The sooner you get that initial legal advice the sooner you’ll know whether you should pay the child/spousal support. The sooner you will feel the relief of knowing where you’re heading. The sooner you will be turning the corner to a calmer financial life.

 

How Do I Know if I Should File for Bankruptcy?

July 1st, 2020 at 7:46 pm

Texas bankruptcy attorney, file for bankruptcy in TexasFor many people, the thought of filing for bankruptcy is a scary one. However, for many people, filing for bankruptcy is the best thing they could do for their finances. Filing for bankruptcy allows you to wipe your slate clean and discharge most of your unsecured debts, but it does come with some consequences. Filing for bankruptcy might make your life more difficult in the future, by making it harder to borrow money, lowering your credit score or even affecting your insurance rates. It can be difficult for some people to gauge whether or not bankruptcy is in their best interests, which is where a skilled Texas bankruptcy lawyer can help.

Your Debts Far Exceed Your Income

Think about all of your different types of debt: your mortgage or rent, car payment, all of your different credit cards, and personal loans. How much total debt do you have? Now, think of your income. How much money do you bring in each month? If your monthly debt obligations are much higher than the amount of money you bring in, you may want to consider filing for bankruptcy.

You Face Foreclosure or Repossession of Your Home or Car

Another big reason why people file for bankruptcy is that they are currently experiencing or being threatened with a foreclosure or repossession. When you purchase an expensive object, such as a home or vehicle, it is unlikely that you will buy it outright. Rather, you borrow the money from a lender and repay it over time. If you fail to repay your loan, your property could be taken back. Filing for bankruptcy puts a temporary halt to any foreclosure or repossession actions, giving you time to readjust your finances.

You Have Tried Negotiating with Your Creditors

If you are considering bankruptcy, you have likely already looked at other options for debt relief. One of the easiest things you can do to help lessen the burden is contacting your debtors and seeing if they are willing to work something out with you. Many lenders do not get anything if you file for bankruptcy and will want to work with you, but this is not always the case. If your creditors are unwilling to negotiate or you are still having trouble, bankruptcy might be your best option.

Discuss Your Situation with a San Antonio, TX Bankruptcy Lawyer

Bankruptcy is not for everyone, but for many people, it can give them a second chance with their finances. If you are in debt and are wondering if bankruptcy is right for you, you should speak with a knowledgeable Boerne, TX bankruptcy attorney. At the Law Offices of Chance M. McGhee, we will look over your financial situation with you and determine whether or not bankruptcy would be in your best interests. To schedule a free consultation, call us today at 210-342-3400.

 

Sources:

https://www.investopedia.com/articles/pf/08/bankruptcy-filing.asp

https://www.thebalance.com/should-you-file-bankruptcy-960627

https://www.moneyunder30.com/when-you-need-to-file-bankruptcy

 

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.

 

Consumer Bankruptcies Not Increasing–Yet

May 18th, 2020 at 7:00 am

After declining significantly since 2010, consumer bankruptcies edged up in 2019, increased in March, then oddly sharply declined in April. 

 

In the last two weeks three major retailers filed Chapter 11 bankruptcy: J. Crew, Neiman Marcus, and J.C. Penny. Total business Chapter 11 reorganizations were up 26% in April 2020 compared to the same month last year. (560 compared to 444.)

What about consumer bankruptcy filings? What has happened so far, and what’s to come?

Consumer Bankruptcy Filings So Far

Since the Great Recession, consumer bankruptcy filings had been declining. They’d topped out at more than 1.5 million filings in 2010, then came down steadily for almost the full decade. Only half as many consumer bankruptcies were filed in 2018, about 751,000. Then in 2019 the number nudged up for the first time since the Great Recession, although just barely. Annual Business and Non­-business Filings by Year (1980­-2019).

So what about the first few months of 2020? The last couple monthly totals are very unusual. After holding steady during January and February, there was a significant uptick in filing in March. Consumer filings increased 12% that month from the prior month (from 53,087 to 59,668). But then in April filings plummeted, dropping 39% (down to 36,161 for the month).

What’s going on? Common sense says that as the reality of the pandemic set it, people who had been on the brink, and/or started getting hit economically, and rushed to file. That accounts for the March increase.

Then when states started shutting down in late March and early April, connecting with a bankruptcy lawyer to start the bankruptcy process became more difficult. Plus the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) passed in late March. People have been waiting to see if the one-time relief payments, and its enhanced unemployment benefits, would help enough. These account for the sharp decrease in April filings.

What’s Happening Soon

In the last 8 weeks 36.5 million Americans filed unemployment claims. Countless others are working less hours and/or for lower pay.

According to one recent poll 77% of laid off workers believe they’ll get their jobs back “after stay-at-home orders are lifted.” That may well be overly optimistic. Millions of businesses face deep financial stress because of the pandemic. Many will not reopen. The health safety changes required by the virus will add costs and reduce income for entire industries. Restaurants, transportation, and retail are obvious examples. Businesses with thin financial margins will either not reopen or will try but won’t succeed. As part of a recent Time magazine article title says, A Flood of Small Business Bankruptcies Likely in Coming Months.

On top of all that, states and local governments are sharply losing tax revenue so job cuts are inevitable.

Even among those who do get back their jobs, those without enough savings will be left with an income hole. Many will need bankruptcy relief.

According to Amy Quackenboss of the American Bankruptcy Institute, “We think business filings will see an uptick in April with consumer filings to surge in May and June.” She said this in early April. She was accurate about the April business filings. She’s likely right about the consumer filing surge as well.

Household Debt Burden

One very reliable indicator of future consumer bankruptcy filings are the amount of household debt and its delinquency rate. Here’s a comparison of these two just before the 2008-09 Great Recession vs. just before the COVID-19 pandemic.

While mortgage and credit card debt is only modestly higher now, vehicle loan debts are up 63% and student loan debt has nearly tripled.

The delinquency rate overall was recently virtually as high as it was just before the Great Recession. Back then that resulted in a doubling and then nearly tripling of consumer bankruptcy filings between 2006 and 2010. The even worse household debt burden and delinquency rate pre-pandemic foretell a similar new surge in bankruptcy filings.

 

Top Things You Should Know About Declaring Bankruptcy

March 12th, 2020 at 3:11 am

TX bankrupcty lawyers, TX chapter 7 lawyersBeing in debt can feel like you are drowning, especially if you are so far into debt that you do not see a way out. Whatever the reason for the extreme amount of debt, there are options that you can consider to help with the debt. For many people, bankruptcy can be the right option to relieve them of most, or even all of their debt. However, filing for bankruptcy is not easy and can actually be quite complicated and confusing. Each bankruptcy case is different, so it is not always simple for you to know what to expect after you declare bankruptcy. Here are a few things you should know if you are considering filing for bankruptcy.

Bankruptcy Does Not Happen Overnight

Some people think of bankruptcy as being similar to small claims court where you usually receive your disposition the same day you attend court. This is not the case. The bankruptcy process is complex and typically lasts at least a few months if you file for a Chapter 7 bankruptcy. If you file for a Chapter 13 bankruptcy, the case is open and ongoing for three to five years, the duration of your repayment plan.

Not Everyone Qualifies for Bankruptcy

Not just anyone can get a bankruptcy. Especially for a Chapter 7 bankruptcy, there are certain requirements that you must meet, such as being below a certain income level and passing the means test. The means test is a way of determining your monthly income and expenses to figure out how much disposable income you have each month.

If You Do Qualify, Not All Debts Are Eligible to Be Discharged

Another misconception that people have is that they will be completely free of debt once they have filed for bankruptcy. This depends on a couple of things. First, it depends on the type of bankruptcy you file and second, it depends on the type of debt you have. Most unsecured debt will be discharged in a Chapter 7 bankruptcy, such as credit card debt. However, student loan debt, federal, state and local taxes, alimony and child support debt cannot be discharged or forgiven in bankruptcy.

Your Bankruptcy Will Affect Your Credit

Though bankruptcy can have a huge effect on your life, perhaps one of the most prominent effects is what bankruptcy does to your credit. After a Chapter 7 bankruptcy is finished, it will be reported on your credit report and will stay there for up to 10 years. Most creditors will shy away from loaning money to someone with bankruptcy, so it may be hard for you to open a credit card, take out a mortgage or buy a car.

A New Braunfels, TX Bankruptcy Attorney Can Help

If you are unsure of whether or not bankruptcy is right for you, you should talk with a skilled San Antonio, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help you understand all of your options available to you to manage your debts. We can also help you make the right decision about what is best for you and your family’s situation. To schedule a free consultation, call our office today at 210-342-3400.

 

Sources:

https://www.thebalance.com/top-things-to-know-about-bankruptcy-316198

https://www.thesimpledollar.com/credit/bankruptcy/what-to-expect-when-filing-for-bankruptcy/

 

What Does the Texas Bankruptcy Process Look Like?

February 14th, 2020 at 4:33 pm

BankruptcyTexas bankruptcy attorney, TX chapter 7 attorney, TX bankruptcy process, is the legal process of determining whether or not a person or business is actually unable to pay their debts and if their debts should be discharged. For individuals, there are two main types of bankruptcies — Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, typically the filer has their debts discharged or forgiven at the end of the process. In a Chapter 13 bankruptcy, the filer’s debts are reorganized and a repayment plan is entered for three to five years to pay off as much of the debt as possible.

According to statistics from the Judiciary Data and Analysis Office, the most common type of bankruptcy that is filed is Chapter 7 bankruptcy, which made up around 60 percent of all bankruptcy filings in 2017. If you are thinking about filing for a Chapter 7 bankruptcy, it is important that you understand the process.

Before You File

The first step in the bankruptcy process is to get a firm grasp on your financial situation. You should gather all of your documents that are needed for bankruptcy now so that you can look at the whole financial picture and because you will also need them as proof when you go to file. You will need documents such as:

  • A copy of your credit report
  • Tax returns from the past two years
  • Proof of income from the past six months
  • Bank, retirement and brokerage account statements
  • Valuations of any real estate you own
  • Title and loan information on your vehicles, if you own any

Preparing and Filing Your Documents

The most time-consuming portion of the bankruptcy process is just filling out the forms needed to actually file. This is where an attorney would come in handy. There are around 70 pages of information that you must fill out, much of it requiring a lot of calculations and writing down repetitive information. Your attorney would be able to do most of this legwork for you, making sure that calculations and information are correct and preventing any delays in filing. If you file the forms yourself, you must go to the courthouse in person, file the forms with the clerk and pay the $335 filing fee. If you hire an attorney, he or she will do this for you.

Credit Counseling Requirements

As a requirement of filing for bankruptcy, you will also have to complete two counseling courses. The first one is a credit counseling course and should be completed before you file. The second course is centered around debt education and must be completed after you file, but before your creditors’ meeting.

Meeting of Creditors

The final step in the process is attending your 341 Meeting or your Meeting of Creditors. The point of this meeting is to ensure that all of your information on your forms is correct and that you are not hiding any assets or income that could be used to repay your debts. A majority of the time, creditors’ meetings only last about five minutes and end with your debts being discharged and your bankruptcy complete.

Our Knowledgeable San Antonio, TX Bankruptcy Attorneys Can Help

Though it is not required to have an attorney when you file for bankruptcy, it can greatly help your case by preventing mistakes you might not even know you are making. At the Law Offices of Chance M. McGhee, we can help you get your life back on track and file for bankruptcy. Call our Boerne, TX bankruptcy lawyers today at 210-342-3400 to set up a free consultation.

 

Sources:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics

https://upsolve.org/learn/how-to-file-bankruptcy-2019/

https://www.uscourts.gov/news/2018/03/07/just-facts-consumer-bankruptcy-filings-2006-2017

 

Unpaid Child and Spousal Support in Chapter 7

January 6th, 2020 at 8:00 am

Chapter 7 does not stop the collection of child or spousal support, nor provide any procedure to pay the support. It may still help enough.  


If you are behind on child or spousal support payments Chapter 7 may or may not be a good solution.

Chapter 7 “straight bankruptcy” is the most common type of consumer bankruptcy case.  It is more likely to be a sensible solution if 1) the support isn’t being collected aggressively and 2) you don’t owe terribly much. Why? Because:

1) Filing Chapter 7 does not stop collection of unpaid child or spousal support. Chapter 13 can.

2) Chapter 7 does not give you a procedure for catching up on the support. Chapter 13 “adjustment of debts” does so.

So why would you file a Chapter 7 bankruptcy if you were behind on support?

Filing Chapter 7 When Owing Support

Chapter 7 is usually the most straightforward type of bankruptcy. A case lasts only about 4 months from when your bankruptcy lawyer files it to when it’s completed. A Chapter 13 case involves a formal payment plan that almost always takes 3 to 5 years to finish.

As mentioned above Chapter 13 can stop the immediate collection of unpaid support, and give you time to catch up.

The much quicker Chapter 7 makes sense if you don’t need these kinds of help.

If you stopped paying the debts that Chapter 7 would discharge, could you quickly catch up on support? Would your ex-spouse be willing to accept monthly catch-up payments at an amount you could afford? Or if the debt is being collected by a support enforcement agency, would it accept such voluntary payments? Could you reliably make such payments, while presumably keeping current on the ongoing monthly support?

If you have a feasible way along these lines to catch up on your support obligation during and after your Chapter 7 case, then it may well be your best option.

Other Advantages and Disadvantages of Chapter 13

But you and your bankruptcy lawyer will discuss two other considerations revolving around your other debts.  Chapter 7 and Chapter 13 deal with debts quite differently.

The first consideration is about debts secured by your assets or other ones that you must pay. Secured debts include home mortgages, vehicle loans, and any others with a lien on anything you own. Debts you must pay—besides support—include recent income tax debts. Chapter 13 often handles these kinds of debts much better than Chapter 7. Without getting into the details here, Chapter 13 protects you while you pay such special debts as your budget allows. If you have such debts, how Chapter 13 helps with those may be reason enough to choose that option. Or this, along with the benefits it gives you with unpaid support, may swing you in that direction.

The second consideration is about the rest of your debts—those that are neither secured nor ones you must pay.  These are your “general unsecured” debts. Usually you can discharge (legally write off) all or most of such debts in either Chapter 7 or 13. In most Chapter 7 cases you pay nothing on your general unsecured debts. However, In a Chapter 13 case you often pay a portion of these debts. Whether and how much you pay on your general unsecured debts depend on lots of factors. The biggest factors are your income and expenses and the amount of your special debts (secured and otherwise) that you are paying in full. So you need to weigh the benefits of Chapter 13 regarding your unpaid support and other special debts against the likelihood that you would be paying something instead of nothing on your general unsecured debts.

What Happens to Your Unpaid Child/Spousal Support Debts in a No-Asset Chapter 7 Case?

A “no-asset” Chapter 7 case is one in which everything you own is covered by property exemptions. Exemptions usually allow you to keep certain dollar values of assets in various categories. Most Chapter 7 cases are “no assets” ones. If yours is, you’re able to keep everything (with the exception of collateral you decide to surrender).

In a no-asset Chapter 7 case your bankruptcy trustee does not get any of your assets to liquidate and pay to any of your creditors. (That’s why it’s called “no asset.”) Your bankruptcy lawyer will tell you if yours is expected to be.

Since the trustee doesn’t collect any money to pay your creditors anything, your support debts also receive nothing. So, a support debt gets no money directly from a no-asset Chapter 7 case. You have to deal with the support debt yourself (perhaps with the help of your lawyer), and be prepared to do so right away.

 

Will Filing Chapter 7 Bankruptcy Stop a Foreclosure?

November 13th, 2019 at 11:17 pm

TX foreclosure attorney, Texas chapter 7 lawyerIf you are behind on your monthly mortgage payments and you have reached the point that your loan is in default, you could be facing a possible foreclosure on your home. You probably realize that if the bank forecloses on your loan, your home will be seized and sold, with the proceeds of the sale will go toward satisfying what you owe the bank. In the meantime, you might not have a place to live, and the foreclosure will leave a lasting mark on your credit.

Most people who are facing possible foreclosure often have a substantial amount of other debt in addition to their home loan. These obligations may include medical bills, credit card debt, and outstanding loans, such as personal loans and educational loans. As a result, it is not unusual for an individual in such a situation to consider filing for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. In certain cases, Chapter 7 bankruptcy might allow you to stop foreclosure proceedings, and a qualified bankruptcy attorney can help you understand your available options.

Bankruptcy Puts a Stay on Collection Activities

Under federal law, filing for bankruptcy of any type will result in an automatic stay being issued on all collections activities related to any debt that you have. The automatic stay applies to foreclosure, even if the lender has already initiated formal foreclosure proceedings. If the lender continues to push the proceedings after the stay has been ordered, your lender is violating federal law, and sanctions against the lender are possible.

The stay, however, will not last forever. In fact, the lender can petition the bankruptcy court to lift the stay so that foreclosure proceedings can continue. If the court has good reasons to believe that you will not ultimately be able to keep your home, the court may grant the lender’s petition to lift the stay.

Chapter 7 and Foreclosure

The goal of a Chapter 7 bankruptcy is to have as many of your obligations as possible discharged. During the proceedings, you may be required to sell any property of value. Texas law provides exemptions for the equity value in your home, presuming that your property does not exceed the established acreage limits of 10 acres in a city, town, or village, or 100 acres anywhere else.

Medical debts, credit card balances, and unsecured loans are typically eligible to be discharged in a Chapter bankruptcy, as is the amount you owe on your mortgage. Discharging your mortgage obligations, however, does not mean you simply get to keep the home; it means that you are no longer personally responsible for paying the debt. The lender still has the right to take the home to try to recoup its losses. In practice, this means that when the automatic stay expires, your lender is likely to restart the foreclosure process. The proceedings must start again from the very beginning, giving you an additional few months to decide what you will do next.

From a practical standpoint, if you have already paid a substantial amount of equity into your home, a Chapter 7 bankruptcy might not be the best option for stopping a foreclosure. If you do not have any other choices, however, a skilled attorney will help you pursue a favorable outcome in your unique situation.

Call a New Braunfels Bankruptcy Attorney

If you have fallen behind on your mortgage and you are looking at the possibility of bankruptcy to stop foreclosure proceedings, contact an experienced San Antonio Chapter 7 bankruptcy lawyer at the Law Offices of Chance M. McGhee. Call 210-342-3400 for a free consultation and case review today.

 

Sources:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm#41.001

When Should I Delay Filing for Bankruptcy?

October 31st, 2019 at 7:14 pm

bankruptcyDeclaring bankruptcy can get you out of a less-than-favorable financial situation when you are in need, but your circumstances will dictate which type of bankruptcy you are eligible for and how much the bankruptcy will help you. Once you have figured out that you want to file for bankruptcy, you must then determine when your most opportune time to file is. In certain situations, you may want to delay filing for bankruptcy. Delaying your bankruptcy can sometimes allow you to keep more of your money, protect a friend or family member’s money or even increase your chances of qualifying for a Chapter 7 bankruptcy. Here are a few situations in which you may want to consider delaying filing for bankruptcy.

You Paid Money Owed to a Family Member Too Close to Filing

If you pay certain creditors $600 or more prior to receiving a discharge, your bankruptcy trustee could demand the money back from the creditor. This is called a preference because you have put that creditor in a better position than your other creditors. The preference period for most creditors is 90 days prior to filing for bankruptcy. For “insiders,” such as friends or family members, the preference period is one year prior to filing for bankruptcy.

You Recently Transferred or Gifted Money or Property to Someone

If you give away or gift property or money and get nothing in return, you could also face allegations of fraudulent transfer. Even if the property or money was a gift given with good intentions, you can still face these allegations if you file for bankruptcy less than two years after you give or transfer the property or money.

Your Income Has Decreased or You Expect Your Income to Decrease

If you want to file for a Chapter 7 bankruptcy, you will have to pass what is called the means test. The means test compares your income to the median income in your state. If you fail the means test, it will be extremely difficult for you to qualify for a Chapter 7 bankruptcy, if you can even qualify at all. If you know that you currently make too much to qualify, but that you will not be making as much in the future, you should wait to file for bankruptcy.

Our New Braunfels, TX Bankruptcy Attorney Can Advise You When to File

Like many things in life, timing is everything when it comes to bankruptcy. Even just a few days’ time can mean the difference between discharging certain debts and being forced to repay them. If you are unsure of when the best time to file for bankruptcy is, you should contact our skilled San Antonio, TX bankruptcy lawyer today. At the Law Offices of Chance M. McGhee, we will examine your case and advise you as to when you should file for bankruptcy so you can benefit from it the most. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

https://www.thebalance.com/what-is-chapter-7-bankruptcy-316202

https://www.law.cornell.edu/uscode/text/11/547

https://www.law.cornell.edu/uscode/text/11/548

What Does a Bankruptcy Trustee Do?

September 16th, 2019 at 4:40 pm

trusteeThe most common types of bankruptcies that are filed in the United States are Chapter 7 and Chapter 13 bankruptcies. There are many differences between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, mainly in the way that the debts are handled. While these two types of bankruptcies differ greatly in many aspects, they do have one thing in common — they both utilize a bankruptcy trustee.

If you have thought about getting a bankruptcy or you have done research about getting one, you have probably come across the term — but do you know what a bankruptcy trustee is? It is important to understand the role of the trustee if you are getting a bankruptcy or considering one.

What Is a Bankruptcy Trustee?

A bankruptcy trustee is a person who works on a bankruptcy case to act as the middleman between the debtor and the creditors. The trustee is not an employee of the bankruptcy court, but rather an independent contractor who is hired to prevent the court itself from having to collect and/or distribute property. Trustees are also responsible for reviewing all financial information that is submitted by the debtor to ensure it is accurate and true.

Trustees in a Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, or liquidation bankruptcy, your non-exempt assets are liquidated or sold so that you can repay as much of your debt as possible before the rest of it is discharged. A trustee in a Chapter 7 bankruptcy is responsible for determining which of your assets are non-exempt and using the money from those to repay your debtors.

Trustees in a Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, you reorganize your debts so that you can come up with a three- to five-year repayment plan to pay back all or most of your debts. In this type of bankruptcy, your trustee is responsible for overseeing the repayment plan. He or she will collect your payment each month and distribute it to your debtors.

Questions About the Bankruptcy Process? A San Antonio, TX Bankruptcy Attorney Can Help

Making the decision to file for bankruptcy is a serious one. Your credit score will be affected and the bankruptcy will appear on your credit report for a number of years. Ultimately, the bankruptcy trustee can affect your bankruptcy case for the good or the better, which is why it is important to understand their role in your bankruptcy case. If you are thinking about filing for bankruptcy, you should talk with a knowledgeable Boerne, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help make sure your bankruptcy process is smooth and as stress-free as possible. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

https://www.investopedia.com/terms/b/bankruptcy-trustee.asp

https://www.creditkarma.com/advice/i/bankruptcy-trustee/

https://www.thebalance.com/who-is-a-bankruptcy-trustee-316199

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210-342-3400

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