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Chevy Cruze: Top Selling Car Thanks to Bankruptcy!


Many who read the headline of this article might question the premise of a bankruptcy leading to the hottest selling car in the world. It would be a stretch if this was a fictional story. The amazing thing about this article is that it is absolutely true.

First of all, the Chevy Cruze is one of the hottest selling cars in any domestic car line. There are a lot of reasons. It is apparently a well-built car and it gets great gas mileage. The Cruze has sold over 700,000 units either under that name or the Daewoo or Holden names. The Cruze grew out of a former good seller, the Cobalt. The Cruze sales have tripled those of the best sales year for the Cobalt. The Cruze is overtaking even imports. More importantly for the future of GMC, the vast majority of Cruze buyers are purchasing the first Chevrolet they have ever owned. Not only is it a very popular car, it has better gas mileage than any gasoline powered car including the hybrids. Further, it is loaded with many safety features often found only on the more expensive imports.

How does bankruptcy lead to such a success? Prior to the bankruptcy of GMAC, the company was bogged down with lines of cars which had quit selling many years ago. They did not have the resources to develop new lines of automobiles or the flexibility to re-tool plants because so much of the monthly income was devoted to servicing too much debt. If ¾ of the income is debt service, then there is nothing left for investment by the time a company that size pays payroll and buys current materials.

GMAC filed what many call a pre-packaged bankruptcy. Realistically, it is not all that different than the type many individuals file. All pre-packaged meant is that the outcome of the case was fairly certain. A good consumer bankruptcy practitioner can predict how a case will be resolved. Just as in the GMAC bankruptcy, there are no guarantees but with the expertise of the law firm, results are somewhat predictable.

GMAC stripped off millions of dollars in Debt. They were able to take that freed-up capital and by the tooling and pay the engineers to come up with a radically different design for an automobile. That one car has led them to the profitability which had eluded them for all of these years.

Individuals often have a very similar result. It is not uncommon to have a client who has devoted 30 to 40% of their income to paying past debt. They have had to clean out savings and not buy the things needed to fix up the residence. By filing bankruptcy, the 30 to 40% of the income which was going for debt now can go for those capital improvements.

It is not uncommon for a client to let our firm know that, post bankruptcy, they are able to actually visualize a retirement or send a child to college. Prior to the filing of the case, they really believed they would have to work their entire lives just to get a chance to catch up. In reality, had they continued in the cycle they were in, the credit card debts would not have reduced in their lifetime. Most people are paying the minimums and can only maintain the level they are currently paying. You may be in the same situation, but you will not really know until you meet with a qualified bankruptcy attorney. Come visit with one of our attorneys and see what we may be able to do with your crushing debt.

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The Trial

Although most accident cases settle before trial, there are a few that actually get to a jury. Knowing this, every case in pre-litigation is handled with litigation in mind so as to have a file prepared to go to litigation if the need arises.

So, we need in pre-litigation to have the same proof mindset that we have in litigation.

In a trial, we need to prove two things, and then we need to prove a connector.

First, we need to prove that the accident or incident was the defendant’s fault. We must prove that the defendant is the only person who is responsible for the accident. This is called liability. We must prove the defendant is liable.

Second, we must prove damages. We must prove there were authentic medical bills, lost wages, pain, suffering or any other damages that apply.

Then we must prove the connector. We must prove that it was the accident that caused the damages. The defense may claim that the injuries you suffered came from an earlier accident or incident. We have to prove that the accident, and only the accident, caused the damages we are claiming.

Knowing these elements, we in pre-litigation prepare our cases to prove the exact same elements to the insurance companies with whom we are negotiating. The insurance companies must know that if they refuse to settle with us, we already have the proof we need to be successful in trial.

And that is what makes us always prepared to represent each and every client we have at Bailey & Galyen.

A Cruel Retirement, Part One: Medical Crises


Retirement is supposed to be a great time of our lives. Everything is paid for, the kids are grown and you are ready to travel. Unfortunately, this image is more ideal than real. The truth is that retirement for many people is difficult. Whether this fact impacts you or an elderly loved one, it is important to understand that the dynamics of filing for bankruptcy are very different when we are older.

A recent article in a London publication documented that there has been a dramatic shift in England of the number of elderly people who have financial troubles. Bankruptcy attorneys are seeing a similar shift in the United States and, particularly, in Texas. There are so many causes of this problem that it is hard to focus on any one reason.

Part of the problem is health care. We tend to have more health problems in our later years. While insurance sometimes pays a majority of these costs, even the deductible can be devastating to someone on a fixed income. I have found that many people really do not have a feel for how difficult it is to live on a fixed income. Yet, those same people often live check to check themselves. Imagine living on an income that does not adjust for rapid inflation. Even gasoline costs have increased. And medical creditors are among the most vicious creditors of all. They do not take “no” for an answer. The days when you could pay just $10 a month to a medical creditor are gone. Hospitals often turn people over to a collection agency soon after their hospital visit, and the phone calls begin immediately. Elderly people are often not able to withstand the intense pressure of collection professionals, who will ask questions such as, “don’t you believe in paying your bills?”

People in their later years are very proud. They have worked all of their lives, paid all of their bills and done quite well for themselves. Suddenly, they are faced not only with little income but with little or no prospects for generating enough income to be able to dig themselves out of a hole. When a bill collector begins the harassment, it is not simply an annoyance for most people in their mature years. People who have always been able to write a check and make that payment suddenly have their honor and their worth challenged.

Even if an elderly person can get past the simple embarrassment and emotional end of being harassed by a medical bill collector, a real fear is that more such creditors may be on the way. The sad truth is that when both spouses are suffering from health issues, there is no escape. The fear that you may not be able to get treatment for your spouse if you do not pay current medical bill is one most of us can relate to. We would do anything for our loved ones. Don’t forget, bill collectors know this and use it extensively when dealing with those who have medical debt. Such collectors often suggest helpful hints for paying the medical debt — all you have to do is pull out that credit card that has had a zero balance for years and pay the bill. When you do that, the calls will stop, the bill is gone and you can feel good about yourself again. An instant solution. Unfortunately, far too many people succumb to that suggestion.

If you or a loved one is facing a medical debt situation, consider talking to a bankruptcy attorney PRIOR to depleting the resources that may be needed to sustain your years of retirement. The consultation is free and there may be other options. However, until you sit down with an experienced attorney, you will not know if bankruptcy can help.

Vehicles in Bankruptcy


We all love our cars and, more importantly, we need our cars. A common question for those considering bankruptcy is can I keep my car, and if I have a payment, how do I pay for it?

The answer depends on several factors.

In a Chapter 7 liquidation case, cars used for personal and household purposes are exempt from the claims of creditors — you can keep them. This exemption is usually limited to one vehicle per driving-age member of the household. Keeping the vehicle is subject to any valid financing agreements, however — there are no free cars in bankruptcy! If you choose to keep the vehicle and have a car note, you can reaffirm (retain) the debt and it will survive the bankruptcy, and you will be bound to the original terms of the note.

In a Chapter 13 case, cars are also exempt as in Chapter 7. However, a Chapter 13 payment plan can be used to pay the car note under different terms than under the original contract. If you have owned a vehicle for 910 days (two and a half years), then you can pay the value of the vehicle through your bankruptcy rather than the amount of the debt. Due to the depreciation of cars, this can be a substantial savings. In most cases we can also alter the interest rate paid to the creditor, another source of savings. Lastly, the payment itself can be stretched over a 60-month term. You can see how in Chapter 13, we can essentially “refinance” the car note to reduce your payment — and at the end of the case, you get clear title to the vehicle!

It should be pointed out that, in either type of bankruptcy, if you would like to be free from your car note, you can surrender the vehicle to the creditor and discharge (eliminate) the debt.

Lastly, note that motorcycles “count” as vehicles in all respects. If you have two driving-age members in your household and own two cars and a motorcycle, the motorcycle would typically not be an exempt asset and the creditors would be entitled to the net value of the motorcycle.

As in all legal matters, it is important that you get legal advice specific to your situation. Give us a call at your convenience to set up a free appointment to discuss your legal situation.

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