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The Importance of Following Bankruptcy Laws
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.
Floating Check Controversy: Whose Money Is It?
According to the Bankruptcy Code, all a debtor’s nonexempt property belongs to the bankruptcy estate and the trustee has the power to collect such property and distribute the money to creditors. These seemingly straightforward provisions can have a significant impact on a debtor’s bank account. Just because there are funds in the account does not necessarily mean that the money belongs to the debtor.
Assume that David Debtor pays his mortgage with a debit card one morning, and files a voluntary Chapter 7 petition a few hours later. Technically, that payment is still in David’s account, because the bank may take several hours, or even several days, to process the transaction. But if David spends the money, he will be overdrawn. If the trustee later files a Section 542(a) motion demanding the money, what happens?
The floating check controversy also occurs in reverse. Bankruptcy debtors sometimes get tax or escrow refunds, win the lottery, receive an inheritance, or experience some other financial windfall. Again, if the trustee files a motion for turnover, what happens?
Foreclosure Defense: Saving Your Home
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
The Poverty Prejudice
What do attitudes about the nature of poverty tell us about bankruptcy filings?
In 1995, 60 percent of Americans said that poor people did not show enough initiative to lift themselves out of poverty, while only 30 percent acknowledged that circumstances beyond the person’s control caused wealth or poverty. 19 years later, these figures had shifted to 44 percent and 46 percent, respectively.
When asked to identify these external factors, some pointed to low-wage jobs that do not pay enough for people to get ahead, while others observed that wealth or poverty was essentially a matter of being born into a wealthy or poor family. Still others blamed the high number of government assistance programs that, they claim, encourage people to remain poor.
Will I Lose My Security Clearance If I File Bankruptcy?
Workers at Lackland Air Force Base, Fort Sam Houston, and Randolph AFB, as well as the defense contractors in and around the Alamo City, sometimes hesitate to file bankruptcy because they are afraid they may lose their security clearances. First of all, it is never a good idea to let fear dictate your financial and legal decisions. Second, and more importantly, a voluntary Chapter 7 or Chapter 13 petition does not mean the end of your security clearance, according to both federal law and Department of Defense regulations.
Federal Law
Bankruptcy exists to give people a fresh financial start, and not to punish them for “mistakes” they may have made in the past or to pile misfortune on top of misfortune. So, under 11 U.S.C. 525, it is illegal for any governmental or private employer to make an adverse employment decision on the basis of a bankruptcy filing. In other words, your boss cannot refuse to hire you, refuse to give you a promotion, or fire you simply because you were a debtor in a voluntary bankruptcy.
Should I Use Savings to Pay Off Debt?
Making ends meet when facing steep amounts of debt can be a struggle—especially if you have a family. The truth, however, is that most Americans are in some kind of debt, which often involves expensive mortgages, high-interest credit cards, or student loans.
Many Americans want to end the burden of debt as soon as possible, which is why some of them dip into their savings accounts to pay off lenders. This article will discuss whether or not this is a smart idea.
Weighing the Options
According to U.S. News, one way to reach a decision as to whether or not to pull money out of a savings account is to analyze the long-term effects of debt interest. If the overall interest rate will end up costing you more money in the future, making payments with savings may be a smart decision.
The Real Number One Reason for Bankruptcy Filings
Historically, 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.
Fewer Bankruptcies Now, But Are More Coming?
San Antonio bankruptcy filings are at their lowest rate since 2006, but the decrease may be short lived.
New case filings in the San Antonio Division of the Western District of Texas, which covers Atascosa, Bandera, Bexar, Comal, Dimmit, Frio, Gonzales, Guadalupe, Karnes, Kendall, Kerr, Medina, Real and Wilson Counties, fell 10 percent last year. Volume has declined every year since the Great Recession’s end in 2009. Observers cited a stronger economy fueled by high energy prices as the primary reason for this most recent decline. But, given that oil prices have fallen sharply to their lowest level in years, the area’s economic prosperity may be short lived.
The last oil bust, in the 1980s, triggered a ripple effect that plunged the state into recession.
Understanding Wage Garnishment Laws in Texas
Most Americans have some form of debt, and many struggle to make payments. Some are fortunate enough to get by with responsible budgeting, consolidation, and other financial strategies. However, unexpected circumstances, such as a suffering an injury or losing a job, can cause a debtor to fall behind. In some cases, creditors will garnish a debtor’s income to pay debt.
Although wage garnishment can severely limit a person's financial freedoms, certain requirements must be met in order for wage garnishments to be legal. This article will briefly discuss how wage garnishment laws work in Texas.
Texas Laws Regarding Garnished Wages
For citizens of Texas, creditors cannot garnish wages to pay consumer debt, according to NPR. However, debts involving taxes, student loans, alimony, and child support may lead to wage garnishment.
RadioShack Receives Large Bankruptcy Loan Offer
For 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.
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