A Cruel Retirement Part Two – Non-Fixed Expenses on a Fixed Income

In the first part of this article, we explored how medical debt can be a very crippling economic reality. Of course, retirement is supposed to be a great time in our lives. That is the reality for some people, but how circumstances hit your life can really shatter the plans you have for retirement.

Many of us wake up to find out that the plan we thought we had was not successful. We may have planned to go to school, get a job, get married, raise a family, play with the grandchildren, retire and possibly travel. What we did not expect were the emergencies in our life.

Either we or a family member may have experienced a divorce. Sometimes that reduction of income, if it happens to us, requires a longer work life than we had ever anticipated. Instead of putting all of our disposable income away in a retirement fund, we had to raise a family by ourselves. Repairs to the house had to be put on a credit card to allow us to put food on the table.

Another scenario we see in our office is the one in which the grown child moves back home. Either they have gotten divorced or have lost what used to be a solid job. Suddenly the grandparents are thrust back into the role of supporting the whole family. Sometimes, there is an unplanned pregnancy and we have a whole family back home just as we were planning to start relaxing.

Before too long, we are past the point where we can realistically continue to work. We have absorbed most of the expenses that could be anticipated and had to put the rest on credit cards. At first, it is fairly easy to make it financially. However, as gasoline costs continue to rise, so do food and other commodities. The Social Security check and/or retirement check simply cannot keep up. Each month, it is harder and harder to absorb the difference.

For many in this age group, there is a sense of shame because we think our parents never got into this situation. Realistically they probably did, but the current generation is far more open to discussions about finances than was the last. After a while, the check will not reach until the end of the month. When that decision is made to stop paying the credit cards, the phone calls begin.

Unlike younger people who can escape to work every day, the retired person has to sit at home and hear that phone ring and ring. Each ring brings a new sense of dread. We have been taught to try to work out our problems, so the retired person finally answers the telephone to see if something can be worked out. The abuse has started. The telephone collector is trained to make the person on the other end of the line feel as though they are worthless. Any good collector knows that all you have to do is get the person to shed tears and they will often start drafting a payment.

It all sounds hopeless, but be assured it is not. Bankruptcy can have a tremendous and positive impact on a retired person’s finances. More importantly, it can have tremendous health benefits. Doctors tell us more and more that stress will ultimately have a negative impact on our lives. When you are elderly, the stress manifests itself even more as a health issue. Many people tell bankruptcy attorneys that they cannot sleep anymore and that is why they must file for bankruptcy. Most people are afraid they will lose something in bankruptcy. In most cases, nothing is lost. A well-trained bankruptcy attorney will let you know, prior to filing, if there is any chance of loss of property. In most cases, all that is lost is debt.

If you or a loved one is facing an overwhelming financial debt situation, consider talking to a bankruptcy attorney PRIOR to depleting the resources that may be needed to sustain the 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. At least talk to us.

The New Battlefront

by Steve Sanderfer

At Bailey and Galyen, we are keenly aware of how the legal landscape changes. Through the years, we have always stayed one step ahead of those changes, and we have adapted to meet the challenges as they arise to better serve our clients.

Recently, several of the major insurance companies have declared war on YOU, the injured victim. All of these companies with their cute television ads and promises to be there for you actually don’t care about you at all.

The new tactic these companies use is to seriously undercut what you deserve for your accident, especially when your medical bills are less than $6,000. They hope that if they offer you thousands less than what your case is worth, you will drop your case. They also hope that your attorney will choose not to pursue further legal action in those cases. Their goal is to chase you, the victim, away and force law firms out of business.

But at Bailey and Galyen, we do not run. We fight.

Bailey and Galyen has always had a litigation department. And Bailey and Galyen’s litigation department will continue to be the finest litigation department in the state.

But to combat the new insurance company tactic, Bailey and Galyen now, in addition to its litigation department, will have a small claims department. This department will fight the litigation battles for those cases in which the medical bills are $6,000 and under. Where other firms might withdraw from those cases, B&G simply sees this as another way to fight for YOU.

And that is what Bailey and Galyen is all about.


The Answer is Yes … you can keep your stuff after a bankruptcy!

“Can I keep my stuff?” is one of the most common questions asked by a bankruptcy client of Bailey & Galyen, and for the overwhelming majority of our clients, the answer is yes … you can keep your stuff after a bankruptcy.

Assuming you have lived in Texas at least two years before the filing of a bankruptcy, you can choose between the Texas and federal “exemptions” — laws that allow you to protect and keep property through a bankruptcy. The choice of exemptions is an important legal decision that will bebased on the kind of property you own and its value, and at Bailey & Galyen our job is to maximize your exemptions. Both exemption paths have a few things in common:

  • Homesteads are exempt from your ordinary creditors. Mortgages, taxes and certain other debts remain on your home.
  • Most vehicles are exempt from your ordinary creditors but, like houses, are subject to valid debts from any vehicle finance company.
  • Retirement assets (such as 401(k)s, IRAs, pensions, teachers’ retirement, etc.) are exempt from your creditors.
  • Most if not all of your personal property assets are also exempt from ordinary creditors (unless they have a “purchase money” lien on them like a car loan). This includes furniture, clothing, jewelry, tools of the trade, pets and household goods.

There are important limits on exemptions, and here at Bailey & Galyen our job is to apply the law to your specific situation so you know what your options are. Even if you own property of a kind that is normally not exempt, there may be bankruptcy options available to you that allow you to keep nonexempt property.

On a related note, you can also keep certain debts. Depending on the chapter of bankruptcy selected and your payment status with the creditor, you are generally able to keep debts on necessary property, such as your homestead and vehicle. “Reaffirming” these debts in a chapter 7 bankruptcy allows those debts to survive the bankruptcy so that you can keep the collateral (house or car) and hopefully rebuild your credit by continuing to pay those particular creditors.



The new tort reform banners proclaim that plaintiffs who lose civil trials should pay the attorneys fees and costs of the defendant. Mind you, they do not advocate that losing defendants also pay the winning plaintiffs attorneys fees and costs. The one way, loser pays street is a sure dead end for justice and access to the courthouse.

A one way loser pays law would do nothing more than prevent individuals and small business owners from redressing civil wrongs in the courts. The risk of having to pay the other side’ss enormous legal fees and costs will prevent them for standing up for themselves. Sadly, that is exactly what loser pays laws are designed to do.

Loser pays severely harms small businesses by preventing them from filing lawsuits on past due accounts, breached contracts, partnership disputes, and the like. Unlike wealthy corporations, small business will not be able to afford the risk of losing at trial.

The fact is that taking a case to trial is no sure thing, not even for the best case. Lawyers cannot predict with any certainty whatsoever what a jury will do in any given case. Cases that were soundly based on the facts and the law are frequently lost in jury trials. The reason: The enormous amount of undue influence placed on Americans by tort reform groups, political candidates, corporations, and the like. Americans have been inundated with trial lawyer bashing and anti-plaintiff/anti-lawsuit rhetoric, little of which has any truth and are nothing more than wild, cleverly crafted stories.

When these very same Americans are called for jury duty, this undue influence that uses fear and threats to change public opinion morphs into jury tampering. Jurors bring to the courthouse and jury box their fears of doctors leaving the state if damages are not capped in malpractice cases, the cost of consumer goods rising from frivolous lawsuits, teachers quitting if parents are allowed to sue them (which cannot be done, anyway), the lose of jobs from lawsuits, and much more.

So when your state legislators seek to pass laws that make the losers pay the winner’s legal fees and costs, see if for what it is: Corporate immunity. When corporate America wins, Americans’™ access to the courthouse is blocked and we all loose.

In 30 years I have never filed a frivolous lawsuit, nor do I know any other trial lawyer who has. The reason is simple. It costs hundreds of dollars for the filing fees alone, followed by tens of thousands of dollars in costs for pre-trial preparation and trial and years of the attorneys’™ and their support staffs’ time and efforts.


Appeals Court: Debtors must be income eligible to convert from Ch. 13 to Ch. 7

When a federal appeals court recently ruled that Chapter 13 debtors must meet the income eligibility requirements of section 707(b) before their case be converted to a Chapter 7, it joined an increasing chorus of cases with similar holdings. However, the court left an important question unanswered: Which six months of look-back income will the Court require for the purposes of calculating the debtor’s Means Test?

In the consolidated appeal of two Iowa and Minnesota cases, In re Chapman and In re Cruse, Nos. 10-6046 and 10-6047 (8th Cir. BAP Mar. 11, 2011), the debtors had filed a Chapter 13 after the 2005 Bankruptcy Reform Act was enacted. However, a change of circumstances, they converted their chapter 13 cases to chapter 7s, requesting a discharge of their debts prior to the completion of their respective chapter 13 plans. The U.S. Trustee objected, arguing that based on the income they claimed to earn in their chapter 13 plans, they could afford to repay at least part of their debts.  The debtors countered that section 707(b) of the U.S. Bankruptcy Code governing the Means Test only applied when debtors initiated their cases as chapter 7s, not when cases were converted to chapter 7s from chapter 13 filings. Further, they contended that since their changed circumstances inhibited their ability to continue paying into their chapter 13 plans, they should not be subject to the Means Test.  The bankruptcy courts agreed with the debtors, ruling that section 707(b) only applied to cases originally filed as chapter 7s, not conversions. The U.S. Trustee appealed, and the bankruptcy appellate panel ordered the two cases consolidated for the appeal.  In ruling against the debtors, the appeals court held that under long-standing Eighth Circuit federal appeals court precedent, the term “conversion to chapter 7” is synonymous with “filed under chapter 7.” However, since the appeals court did not address the income look-back requirement of section 707(b), future litigation on the matter is likely.

To discuss your bankruptcy matter with one of our skilled Bankruptcy lawyers to determine whether you qualify for a Chapter 7 bankruptcy, please call us toll free at 877.345.6767 (DFW area), 866.715.1529 (Houston area) or 866.678.1900 (South Texas).

We provide affordable payment plans for fees.

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