Bankruptcy FAQ

Stop Foreclosure, Lawsuits, Repossessions, and Harassing Creditors

At some point in almost every person’s life they will face some degree of financial difficulties. People in Texas are no different.

Many people, when they first come to me feel unsure, nervous and even embarrassed by their predicament. Many people are even afraid. They are afraid of what will happen if they file bankruptcy. Will they lose their house or car? Will someone come through their home and take their personal belongings? I always assure them, that while there are definitely concerns, we will work together and do whatever we can to lessen or eliminate these concerns.

Below you will find a brief overview of bankruptcy law in Texas and its procedures!

Should I File for Bankruptcy Protection?

If you are afraid to answer the phone or open the mail because your afraid of creditors or if, have lost your job, suffered reduced salary, experienced high medical or credit card bills, then personal bankruptcy may be an option for you. The most important things to remember are:

1.        Do Not Feel Guilty!

Bankruptcy is about starting over fresh. It is about getting back in control of your financial future. Do not feel any shame for considering bankruptcy. In today’s economy, many people, from all walks of life, are in your situation. We have clients who were making $200,000 plus last year and live in $600,000 dollar homes. Then again, we have an 18 year old who started out in life with $35,000.00 in debt do to “free” credit cards. Who gives an 18 year old a $5,000.00 credit line? Credit card companies!

2.        Bankruptcy Is Not All Your Fault!

Take control. Do not feel humiliated or ashamed. K-Mart, American Airlines, Delta Airlines, General Motors and WorldCom went bust. The telecommunications industry has gone south. Thousands have been laid off. You have no control of this- it is not your fault. You cannot control the economy, you cannot control pie in the sky investors, and you cannot control unethical accountants at multinational corporations (Enron), but you can take control back by contacting a bankruptcy lawyer. Probably since you can remember, marketing companies have been trying to get you to buy into the belief that if you didn’t have the cash, “charge it.”

3.        The Credit Card/Debt Trap

Credit card companies have been begging you to charge up at 23% (some 24.99%) for years. How many “account balance” transfer offers have your received?  How many new extensions of credit? Here’s the trap, after you have established a decent payment history with a credit card company, they up the credit limit.  “Congratulations,” they say. Now that you have more credit, you spend it. They will keep upping that credit limit until you can barely make the minimum payment. Now they own you. Make the minimum payment on your MasterCard or Visa and you will be paying that debt for 35 years or more. Don’t feel any shame about taking back control. The only thing the credit card companies have to fear is the United States Bankruptcy Code and a bankruptcy lawyer. That is why they lobbied Congress to the tune of $25,000,000.00 to get the bankruptcy laws changed to PROTECT THEM from you.  If you are considering bankruptcy, we offer a free consultation to help you come to terms with your financial future. We understand.

Consumer Bankruptcy: Chapter 7 or Chapter 13?–For More Info click on the links..

The first step is to determine which bankruptcy is right for you.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is about liquidating all non-secured debts. Chapter 7 Consumer Liquidation Bankruptcy applies when the monthly payment on all personal overhead (rent/car payment/utilities/groceries) exceeds your take home income. Generally, you will keep your home and your car under the current state of the law. A Chapter 7 Bankruptcy’s main purpose is to discharge most kinds of debts. Debts such as credit card debt, hospital bills, repossessed cars or deficiency judgments on foreclosures are typical debts that are dischargeable. When a Chapter 7 is complete, you no longer owe the debt.

Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy (personal reorganization) is essentially consolidating your debt into one payment. It is most often used by debtors who are attempting to stop foreclosure of a home or repossession of an automobile. Chapter 13 allows you to “catch up.”

Chapter 13 Bankruptcy is about forcing creditors to negotiate with you subject to a bankruptcy trustee’s approval. Often times, Chapter 13 Bankruptcy forces creditors to settle for pennies on the dollar. Once again, you take control and you set forth a Chapter 13 Bankruptcy plan that you can work with. Chapter 13 Consumer Bankruptcy applies when your income exceeds your monthly personal overhead to some extent such that you are able repay some portion of the debt back. Once again, however, recognize Chapter 13 Consumer Bankruptcy is about putting you back in control.

Credit Card Debt Management and Consolidation Services

Many people before they resort to bankruptcy try organizations such as Consumer Credit Counseling Credit or other debt counseling services. BEWARE!  Numerous clients have come to us after using a debt management company like C.C.C.S.  Please be aware “nonprofit” organizations like C.C.C.S., are funded by the credit card industry. Are they on your side? No. Further, some counseling services require you to give them your paycheck. They take their fee, pay the credit card companies a payment, and then give you a monthly stipend. Don’t do this. Take control. Don’t lose control of your financial future. Know what else – if you breach your contract with a debt management company, you loose all the benefits you have gained – penalties and interest all gets put back. Did you contract with C.C.C.S. to protect your credit? They are right there on your credit report as Debt Consolidation Service or Credit Management. They are a negative entry that tells creditors that you are a bad credit risk or that you are not capable of managing your affairs. Consumer bankruptcy and consumer bankruptcy attorneys and lawyers are about empowering you.  Don’t let someone else control you.

Getting Credit after Bankruptcy

Don’t worry; you will get credit following your bankruptcy. Some clients have been very concerned about the state of their credit after filing bankruptcy. It is a fact that a bankruptcy entry will appear on your credit report for up to 10 years following the discharge. This does not mean that you will not get a credit card, buy a home or car for 10 years. Far from it, creditors want you to borrow. Shortly after your bankruptcy discharge, we can almost promise that you will receive a credit card offer.  The fact is, you no longer have the majority of your debt; you have an ability to repay (income is freed up), and you can’t declare bankruptcy (Chapter 7) again for six years.  Further, the probability of a consumer declaring bankruptcy a second time in their lifetime is low.

THE BANKRUPTCY PROCESS

The process begins with the filing of the Petition. The Petition sets forth information about your case such as who you owe and how much you owe. When you come to see me it would help if you have a complete list of your creditors along with their addresses, account numbers and the amount that you owe.  For a charge of  $50.00 you can have a consolidated report from the three major credit reporting agencies. After we have compiled the information, the petition is filed. Shortly after filing the bankruptcy you should receive a notice of a court date. This is known as the Initial Meeting of Creditors or a 341 hearing. The hearing date is usually six weeks after the date of filing. At this hearing you will appear in court an answer a few brief questions put forth by your counsel and the Trustee. Creditors have the right to appear and ask additional questions. Typically only creditors who are requesting that you “reaffirm” a specific debt will attend. Reaffirming simply means that you are entering into a new contract stating that you will keep the debt, usually under the same terms as the prior agreement. In return the Creditor will allow you to keep the property that you owe for. Typically, this works to everyone’s benefit. The Creditor gets the benefit of the original bargain and the debtor gets to keep the property and he or she helps to reestablish his credit.

Usually, sixty days after the hearing you will receive a “discharge.” At that time, the Bankruptcy is closed and you can begin to take hold of your financial freedom once and again.

THE COST OF THE BANKRUPTCY PROCESS

Chapter 7-     Attorney Fees starting at  $1,200.00 (if not subject to very complicated Means Test, if subject to the complicated Means Test attorney fees are generally $1,800.00) for attorney’s fees + $299.00 Court Cost (Subject to Change by the Bankruptcy Court) + $50 Credit Reporting Fee and $100 Credit Course/Financial Management Class Costs (These classes are require to received the benefits of bankruptcy, you may take the classes on-line and they are billed back to our firm.)

Chapter 13-    Starting at $0.00 for attorneys fees*+ $274.00 Court Cost (Subject to Change by the Bankruptcy Court) + $50 Credit Reporting Fee and $100 Credit Course/Financial Management Class Costs (These classes are require to received the benefits of bankruptcy, you may take the classes on-line and they are billed back to our firm.)

* The balance of the attorney’s fees in a Chapter 13 is paid through the Bankruptcy Court.   This requires a first filing and a signed wage withholding order at the time of filing.

Call 972-424-2233 for more information and a FREE initial consultation with no obligation.