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Types of Debt in Chapter 13 Bankruptcies

February 8th, 2019 at 11:01 pm

TX bankruptcy lawyerThere is more than one type of bankruptcy, although Chapter 7 and Chapter 13 bankruptcies are the most common. In a Chapter 13 bankruptcy, your attorney and a team of other professionals are able to help you develop a repayment plan to pay back your debts. The repayment plan lasts for three to five years, depending on a variety of circumstances. Chapter 13 bankruptcies can be beneficial to individuals because it allows you to keep certain assets, such as your vehicle or your home. In a Chapter 13 bankruptcy, certain debts must be repaid before other debts.

Priority Debts

Priority debts are exactly what they sound like — priority over other debts. These debts must be included in any repayment plan you enter and the plan must make sure that your priority debts are paid off first and in full. Typically priority debts include:

  • Past-due child support;
  • Past-due spousal support;
  • Unpaid taxes; or
  • Unpaid wages that you owe employees within the past six months.

Secured Debts

Debts that can be secured by certain property are called secured debts. These types of debts are called secured debts because they can be attached to specific property. If you fail to repay the debts as agreed, the creditor can take back the property. The most common examples of secured debts include:

  • Home loans or mortgages; or
  • Car loans.

Unsecured Debts

Unsecured debts are basically all other debts that you may have. Unsecured debt has no property that can be attached to it, so there is nothing that the creditor can repossess if you do not pay. Common examples of unsecured debt include:

  • Medical bills;
  • Credit card debt;
  • Personal loans;
  • Utility bills; and
  • Business loans.

A Texas Chapter 13 Bankruptcy Attorney Can Help

United States bankruptcy law is extremely complex and is best handled by a professional. At the Law Offices of Chance M. McGhee, we have dealt with over 20 years worth of bankruptcy cases and we know the ins and outs of the bankruptcy process. Our skilled New Braunfels Chapter 13 bankruptcy lawyer can help you sort out your finances and come up with a repayment plan that works for you. To get started reviewing your case, call our office at 210-342-3400 to schedule a free consultation.

 

Source:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

 

Which Bankruptcy Option Eliminates All Debt?

September 30th, 2018 at 5:39 pm

debtOne enticing benefit to filing for bankruptcy is the ability to discharge debts, enabling a fresh financial start. The United States bankruptcy code was created to allow honest debtors to free themselves from insurmountable debt; however there are various limitations. Unfortunately, these limitations restrict which debts become eliminated, reduced, or remain the same. Therefore, regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, some outstanding debts are untouchable.

Which Debts Are Eliminated?

Which debts discharge relies heavily on the type of bankruptcy filed by the consumer. Chapter 13 bankruptcy does not eliminate any debt initially, yet restructures the current sums into an affordable repayment plan. This repayment plan typically lasts three to five years, at the end of which any eligible debts are discharged. When you file for Chapter 7 bankruptcy, any unsecured loans become eliminated immediately. In some instances, unsecured debts make up all of the financial burdens. These debts include:

  • Credit card debt;
  • Personal loans;
  • Medical bills;
  • Payday loans;
  • Older tax debts;
  • Utility bills; and
  • Second mortgages.

Secured Debts Are Non-dischargeable

Chapter 7 bankruptcy does provide significant relief regarding secured, non-dischargeable debts, aside from freeing up a portion of the budget to make regular payments. Alternatively, Chapter 13 includes all financial liabilities in the repayment plan, including secured loans. Non-dischargeable debts include:

  • Taxes within the last three years;
  • Child support payments;
  • Alimony or spousal support obligations;
  • Student loans;
  • Traffic ticket fines;
  • Criminal restitution; and
  • Secured debt on a home or car you plan to keep.

Contact an Attorney

These guidelines are general statements intended to help you determine if bankruptcy may help your situation. Each consumer bankruptcy case depends on a variety of individual factors. Therefore, if you think bankruptcy is right for you, you should discuss your unique circumstances with a proven Boerne bankruptcy attorney. Contact the Law Offices of Chance M. McGhee for a free case review today by calling 210-342-3400. Our experienced team will assess the details of your case and provide honest feedback about the best course of action for your financial future.

 

Sources:

http://www.uscourts.gov/services-forms/bankruptcy

http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics

 

How Bankruptcy Can Be the Start of a More Secure Financial Life

October 27th, 2014 at 9:46 am

bankruptcy solutions in Texas, San Antonio bankruptcy attorneyLet us redefine the popular yet misguided perspective of bankruptcy. First, here are the facts: Bankruptcy  may have a negative impact on a credit score and will stay on record for 10 years. Lenders will consider someone who recently went through bankruptcy as a risk and will be less likely to loan  money. According to Bankrate, it is even possible to see insurance rates rise. Due to these conceptions, many view bankruptcy as a stressful and that it is a difficult way out of debt. But, this does not have to be true.

Bankruptcy is an opportunity—even a tool—that grants debt relief while teaching some valuable financial lessons. There are a variety of reasons why one might consider bankruptcy, and the best chapter to file depends on the circumstances surrounding the debt.

What You May Learn While Going Through Bankruptcy

Different forms, or chapters, of bankruptcy offer different solutions to getting out of debt. What they all have in common, however, is a direct lesson in financial security—both literally and figuratively.

First, applicants for bankruptcy must go through some basic monetary schooling before completing the process. This includes credit counseling, as well as debtor education, which offers lessons, advice and tips for maintaining finances.

Living After Bankruptcy

After going through the process of bankruptcy, the real work is only half complete. Filers may need to commit to a lifestyle that incorporates less spending and fewer luxuries. Learning to live off of income is one of the first steps in this journey. For those with limited income, the transition can be quite difficult.

Establishing credit is another concern for those who have recently declared bankruptcy. For the most part, a secure line of credit is the first way to start. By making responsible purchases and paying them off on time, it is possible to move on to a regular, unsecured credit card with relatively low amounts of interest.

Bankruptcy offers the opportunity for debtors to attain financial stability. If you feel that declaring bankruptcy is the solution for you, having a San Antonio, Texas bankruptcy lawyer with you every step of the way can be beneficial. For the past 20 years, the Law Offices of Chance M. McGhee have helped clients break down their financial hurdles. Contact us today at 210-342-3400 for a free consultation.

Property Exemptions for Bankruptcy in Texas

March 17th, 2014 at 12:12 pm

bankruptcy exemptions, Texas, federal exemptions, Texas bankruptcy exemptions, types of bankruptcy, debtLosing your job or getting expensive medical bills can have devastating effects on your budget.  Without ample savings, it can be hard to make monthly payments, and eventually you may lose your car or even your home.

However, bankruptcy can stop foreclosure, repossession and wage garnishment through selling property or reorganizing existing debts if you are earning income. However, filing for bankruptcy does not mean losing all your worldly possessions. When filing your paperwork, you may choose to use either federal exemptions or the exemptions set out by the statutes of Texas.

Both the Federal and State exemptions allow the debtor to protect equity in their primary residence. This is called the Homestead Exemption and it does not provide any protection to rental or investment properties. Under the federal exemption, you can shield up to $22,975 of equity from a bankruptcy trustee. The homestead exemption in Texas is not limited by the amount of equity in the home, but the size and location of the property. It cannot exceed an acre if it is located in a populated city, village or town.  In rural areas, the exemption can be as large as 100 acres.

Personal property, other than real estate, also has exemptions that protect it during bankruptcy based on the kinds of property. For example, up to $3,450 can be exempted for a motor vehicle under Federal exceptions.

The exemptions in Texas allow for each driver in a household to use.  But the total allowance for all types of property in Texas is mere $30,000 and double for a family. In that case it is important to have a clear idea of how you can use the most of your exemptions to cover home furniture, food, clothing, and other important supplies.

There are other exemptions that should be reviewed while filing for bankruptcy, such as, wages, pensions, insurance.  Contact an experienced bankruptcy in San Antonio today who can help you determine the best step for your finances if bankruptcy is in your future.

2014 is the Year to Get Rid of Debt

January 28th, 2014 at 5:58 pm

Since the ball dropped on New Year’s Day, people have been trying to keep their resolutions. Whether that is quitting smoking, losing weight, or just improving quality of life, keeping up with resolutions can be a challenge. Another common resolution is to get out of debt, and 2014 could be the year for it.

eliminate debt IMAGEThe first step to tackling debt is to list all outstanding balances. Include everything that you might owe for your mortgage, student loans, auto loans, credit card bills, or other bills. It is also important to include the interest rates on these bills so that the most expensive debts are dealt with first.

The next step is to track your spending. Using a year’s worth of bank statements and credit card statements, find out what you spend each month. This will let you see which expenses are necessary and which are not. Use this as a starting point in creating a budget that you can live with, and stick to it. That will allow you to trim any wasteful spending and reallocate those funds to getting rid of debt quickly.

While fun activities may be difficult to cut out, they should be the last thing to budget for. Remember that credit cards are not free money, you will have to pay them off and you will be charged interest on any outstanding balance every month. Celebrate your success when you reach milestones so that you will stay motivated to see your plan to the end.

If you have tried all these steps and still cannot get ahead, then it is time for plan B. Maybe you have lost your job, or experienced an expensive illness or injury, or other unexpected event that makes it difficult to get out of debt. Filing for bankruptcy can let you start over financially. Contact an experienced bankruptcy attorney in San Antonio to review your finances today and make this year the one where you get out of debt.

Knowing Your Rights with Debt Collectors

January 6th, 2014 at 9:00 am

texas bankruptcy lawyerMaybe you are waiting to contact a bankruptcy attorney because you think that the collection calls will stop. Maybe you are feeling overwhelmed and embarrassed by the situation. Rest assured that bankruptcy can happen to anyone and that you should not be afraid to reach out for help. One financial setback like the loss of a job or a serious accident can affect your finances dramatically. Once those phone calls start coming in, however, it can raise some questions about what creditors are and aren’t allowed to do or say when they are contacting you about a debt.

In Texas, your rights are protected under the Texas Debt Collection Act. This law outlines how and when creditors can contact you, but it is also stipulates what is illegal. This law is attempting to cut down on the abusive, unfair, or fraudulent debt collection attempts that have made life frustrating for individuals throughout Texas.

A debt collector cannot try to collect more than the amount that was agreed on, even if the agreement was not in writing. The only way that a debt can be increased is through attorney fees, service fees, collection fees, or investigative fees if these are within a written contract. If you receive notice that a debt collector is coming after you and you dispute the debt, you must do so in writing.

If the debt is legitimate, sometimes debt collectors might engage in abusive behavior in an attempt to threaten you into paying. They are forbidden from threatening violence, making repeated calls anonymously, using obscene language, threatening arrest, or falsely accusing the debtor of fraud or any other crime.

You can make the collection calls stop if you are ready to move forward with your bankruptcy. Whether you have tried in good faith to keep up with the payments or you are just unable to make the payments, bankruptcy can stop your collection calls and get you back on the right financial track. Contact a Texas bankruptcy attorney today for more information.

What is a Chapter 20 Bankruptcy?

December 13th, 2013 at 3:24 pm

piggy bankA Chapter 7 bankruptcy is a common form of bankruptcy because it excuses the filer from all eligible debts.  It is commonly referred to as a liquidation bankruptcy because debts are eliminated by the sale of property and other assets. Creditors are repaid through the proceeds of those transactions.

A Chapter 13 is also called the wage-earner’s bankruptcy.  If someone is earning an income but cannot keep up with past due payments, then a Chapter 13 bankruptcy can give them time to pay those debts. There is a repayment plan that last from three to five years and is based on each person’s income.

Occasionally there are cases when nether Chapter of bankruptcy is appropriate. While a Chapter 20 bankruptcy is not a term found in the bankruptcy code, it is a common strategy to get a fresh start.  It is the process of filing two bankruptcies right after each other to resolve difficult financial situations.  The approach is filing for Chapter 7 protection and then for Chapter 13.

The Chapter 7 bankruptcy lets you eliminate dischargeable debts which does not include child support, taxes, or student loan debts.  If your debts are too high to qualify right away for a Chapter 13 bankruptcy, the Chapter 7 bankruptcy can eliminate enough to become eligible.  That can allow you to focus the majority of your income on debts that cannot be discharged.

The disadvantages of a Chapter 20 filing is you can’t receive a discharge during the Chapter 13 part of the process.  It is also possible that a bankruptcy trustee will object to your Chapter 20 bankruptcy.  They can claim that your Chapter 13 filing is in bad faith.  If that happens, you will be responsible for providing proof that it is necessary given your situation.

If you are concerned about making your monthly credit card payments or losing your family home, then bankruptcy might be an option for you.  Talking to a legal professional can show the benefits of each Chapter based on your situation.  Contact an experienced bankruptcy attorney in San Antonio today.

Bankruptcy Terminology: What is Reaffirmation?

November 29th, 2013 at 11:57 am

texas-reaffirmation-bankruptcyFiling for bankruptcy is a difficult decision. However, bankruptcy is an important tool that gives people a second chance despite the curve balls that life may throw. Indeed, the reason behind the United States Bankruptcy Code is an acknowledgment of the reality that life sometimes just happens.

It is unfortunate that bankruptcy has such a negative stigma. Bankruptcy is an invaluable tool, and if used properly, it allows persons to shed off undesired liabilities while retaining useful assets; just ask Donald Trump.

With proper planning, bankruptcy can even allow a person to continue inhabiting the same home or drive the same car while getting rid of undesired debt. This is all thanks to the concept of reaffirmation. Reaffirmation allows bankruptcy filers to choose to remain liable for the debt that encumbers certain assets, thus keeping those assets.

For example, assume that a person who decides to file for bankruptcy wants to keep a car that they have financed; this may be the vehicle used to make a living or to drive children to school. Under bankruptcy rules, if a person does not reaffirm the debt associated with the car, the bank that financed the purchase would repossess the vehicle and dispose of it as they see fit.

However, a person may reaffirm the debt through a reaffirmation agreement, which allows the debtor to keep the property by continuing to remain liable for the debt despite the bankruptcy. In other words, the bankruptcy filer is promising to continue making the payments on the loan as though the bankruptcy did not happen.

Reaffirmation is a serious matter, however, and people must make certain it is the right thing to do. For example, if the car is worth substantially less than what one owes to the bank, it would make little sense to reaffirm the debt.

While it is true that bankruptcy is a difficult decision, an experienced Texas bankruptcy attorney can ensure that one leverages it to get a fresh start.

Avoid Bankruptcy by Keeping Your Debt under Control

November 11th, 2013 at 12:44 pm

texas-bankruptcy-debtIf you don’t have money to “treat yourself,” then don’t, and while you’re at it, turn off your lights to save on electricity. It sounds simple, but sometimes unexpected expenses pop out and as much as you cut back, there never seems to be enough money to cover everything that you need. Sometimes bankruptcy is your only option. On average, an American household with at least one credit card has a credit card debt of almost $16,000.

CNN Money offers the following tips and tricks about debt and spending to help you avoid bankruptcy:

  • Some debt is good: Taking out loans for big investments like houses and college is okay, but it is still important to only take out as much as you can pay back. Also be sure to compare interest rates before choosing a loaner.
  • Some debts are bad: If you consume items quickly, do not use your credit card to pay for them; these items include food and vacations. If you cannot pay off expenses that continue to build up each month, you are likely to dig yourself into a hole too deep to easily crawl out of. Try setting money aside for these items prior to the expense, so when the time comes, you have the funds ready to pay your bill.
  • Control your spending: Keep track of what you spend your money on each month so you can determine what to cut back on. Twenty dollars here and there adds up more quickly than you might think.
  • Pay off debts with the highest rates first: If you have a higher interest rate on one debt than another, get rid of that debt first. You will be better off letting a lower-rate debt sit and collect interest than having a high-interest debt go unpaid.
  • Avoid Minimums: Try to pay more than the minimum every time you pay your credit card bill, after a payment or two, you will just barely be covering the interest that is accumulating.
  • Be cautious of where you borrow: Borrowing against your 401(k) or home may be convenient, but it could lead to losing your home or not reaching your retirement investment goals.
  • Prepare for the unexpected: You never know when something will go wrong. Try to maintain a cushion of three to six months-worth of living expenses in an emergency fund. This can be used for medical procedures, broken appliances, or car repairs.
  • Don’t rush paying your mortgage: If you have other debt, don’t put all your money into your mortgage payment. Usually mortgages have lower interest rates than other debts. You may also deduct the interest payments on the first $1 million of your mortgage loan.
  • Do not wait to get help: If you cannot handle your debts, get help before you get in too deep.

Debt counselors can help or you can contact a San Antonio bankruptcy attorney for assistance. If you do not think you can pay your debts, attorney Chance M. McGhee can help you in Texas bankruptcy courts today.

Call today for a FREE Consultation

210-342-3400

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