PlentyofFish CEO blasts Texas Attorney General for Blocking Sale of Bankrupt True.com

Texas Attorney General Greg Abbott objected to the proposed sale of True.com, saying the sale would violate a privacy pledge the site made to its 43 million members when they signed up for the dating service. The founder of the online dating site PlentyofFish made an offer to purchase the bankrupt Plano-based online dating site True.com for $700,000. However, after the attorney general said the transfer of all of the personal data to another company would create privacy risks and violate True.com’s privacy policy, the founder of PlentyofFish pulled his offer and, reportedly, lashed out at the attorney general of Texas for torpedoing his company’s plans to purchase True.com.

True Beginnings, the company that owns the database and website True.com, filed for Chapter 11 bankruptcy protection more than a year ago and is in the process of selling its assets. Bankruptcy is a legal action for debtors to deal with insolvency. Title 11 of the United States Code establishes and sets the guidelines for bankruptcy procedure. The common belief that a business is lost after filing Chapter 11 is false. The difference between filing Chapter 11 and Chapter 7 is in the way the bankrupt company solves the problem of debt. With Chapter 7 a company liquefies its assets and pays off debt. With Chapter 11 the company keeps assets and reorganizes the debt in a more manageable way.

At Bailey & Galyen, we represent individuals and commercial clients in bankruptcy proceedings throughout Texas. We assist debtors who are seeking to completely discharge their debts or to restructure their debt through reorganization and repayment plans. If you are facing a bankruptcy, schedule a time to meet with an attorney at Bailey & Galyen to discuss your options. To set up an appointment, contact us by e-mail or call 1-800-208-3104. We will take your call 24 hours a day, seven days a week.


Texas Homeowners Face Tough Laws Once a Home is Foreclosed Upon

The foreclosure process in Texas is very short, simple, and somewhat scary. Many homeowners are unaware that if a homeowner is in default on their mortgage, under Texas law, that homeowner can lose their home in as few as 41 days. And, because Texas is a non-right of redemption state, there is no opportunity to reclaim your property once the foreclosure has taken place. Once the foreclosure sale has concluded, the lender or the new property owner may file an eviction notice if the former owner is still occupying the property. The county constable’s offices serve eviction notices. The notice includes a court date. After the court hearing the former property owner has five days to vacate the property. After five days, the former owner will have a minimum of 24 hours to vacate the property.

For these reasons it is extremely important for homeowners to be informed and act quickly when encountering difficulty making your mortgage payment. Once a home has been foreclosed upon in Texas, there is not a redemption period.

If you are facing a foreclosure, schedule a time to meet with an attorney at Bailey & Galyen to discuss your options. To set up an appointment, contact us by e-mail or call 1-800-208-3104. We will take your call 24 hours a day, seven days a week.


Is a Chapter 13 Discharge of Debts Better Than a Chapter 7 One?

Chapter 13 bankruptcy can discharge more debts than a “straight” Chapter 7 bankruptcy case. But not much more.

When the Bankruptcy Code first became law in the late 1970s, Congress wanted to give debtors some extra incentive to file Chapter 13 payment plans instead of straight Chapter 7s. So the Code at that time allowed the discharge (legal write-off) of many categories of debts under Chapter 13 that could not be discharged under Chapter 7. The broader discharge of debts under Chapter 13 informally came to be called a “super-discharge.” But in the decades since then Congress has amended the law many times, steadily reducing the categories of debts discharged only under Chapter 13. Now only two are left.

1. Nonsupport Obligations

A divorce usually results in two kinds of obligations: support and nonsupport. Under neither Chapter 7 nor Chapter 13 can you discharge support obligations like child and spousal support debts. You can’t discharge nonsupport obligations either in a Chapter 7 case. But you can discharge nonsupport obligations in a Chapter 13 case.

What are nonsupport obligations? They include all the financial obligations arising out of a divorce (or legal separation) that are not support obligations. You may hear them referred to as “property settlement” obligations. They tend to be obligations ordered by the court in the divorce decree stating that one ex-spouse pay a certain amount of money to the other ex-spouse in compensation for having received more than his or her share of the marital property. Sometimes it is instead formulated as an obligation to pay a joint debt or one of the ex-spouse’s debts, again intended to even out the split of property.

These property settlement obligations are the nonsupport ones that can be discharged in the Chapter 13 super-discharge.

2. “Willful and Malicious Injury” Obligations

If someone has a debt for “willful and malicious” injury, that means the debtor is alleged to have hurt someone or someone’s property, and done so either intentionally or at least with a reckless disregard for the safety of that person or property. Sometimes the allegations have been resolved in a trial and resulted in a judgment for damages for the injury before the “judgment debtor” files for bankruptcy. Other times the bankruptcy is instead filed before a judgment has been entered.

A debt for “willful and malicious injury” cannot be discharged under Chapter 7 if the injured party objects to its discharge. Section 523(a)(6) makes clear that a Chapter 7 discharge “does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity.”

However, part of such a debt can be discharged under Chapter 13. Section 1328(a)(2) lists the categories of debts that are not discharged in a Chapter 13 case, and that list excludes from discharge “willful and malicious injury” “that caused personal injury to an individual or the death of an individual.” Notice it does not mention injury to a person’s property. So a debt arising from “willful and malicious injury” to another’s property can be discharged under Chapter 13 (but not under Chapter 7).

What ARE “Nonsupport” and “Willful and Malicious Injury” Debts?

These two categories of debt included in the Chapter 13 super-discharge are not always straightforward in what they cover. “Support” obligations CAN include those that the divorce decree does not call by that name, but that the bankruptcy court determines are “in the nature of support.” As a result, a debt that may appear to be a nonsupport obligation might actually not be. And the line between damage to property that arose out of “willful and malicious” behavior and damage that did not is certainly not always clear.

So the decision to use Chapter 13 bankruptcy to take advantage of the super-discharge involves delicate legal, human and tactical considerations. You need to weigh these considerations carefully with an experienced bankruptcy attorney. So if you live in the Dallas-Fort Worth metroplex, the attorneys at Bailey & Galyen can help you with these decisions. Please call us for a free, no-obligation, confidential consultation at 800-215-9089. Or you can reach us here.


To Discharge Your Debts, Be Honest with the Bankruptcy Court

Bankruptcy law allows you to discharge (write off) most or all of your debts, but you must be candid and accurate in the documents you file with the court and with what you tell the bankruptcy trustee.

Through Bankruptcy You Can Usually Discharge Most of Your Debts

If you file a Chapter 7 “straight bankruptcy” case, the Bankruptcy Code says that the bankruptcy “court shall grant the debtor a discharge” with only certain limited exceptions. See Section 727(a). If you file a Chapter 13 case, the Code states that “the court shall grant the debtor a discharge of all debts,” again with only certain limited exceptions. See Section 1328(a). As long as those exceptions don’t apply to your debts, they will be discharged and you’ll have a fresh start.

There are two sets of exceptions. The first set applies to specific debts. For example, some debts aren’t discharged because of the nature of the debt; child support and some income taxes are examples. On the other hand, some debts may not be discharged because of the debtor’s inappropriate behavior related to the debt, such as the embezzlement of funds or fraudulently incurred loans. But both of these kinds of exceptions apply on a debt-by-debt basis and are not the topic of today’s blog.

The Risk of Not Discharging ANY of Your Debts

The second set of exceptions doesn’t just relate to a specific debt or two, but rather to the debtor’s ability to receive a discharge of ANY debts. This exception is based on the simple rationale that for a person to receive the benefits of bankruptcy, he or she must be honest in going about it.

The type of dishonesty that would risk you losing your right to an overall discharge usually involves either property or financial records. Here are the kinds of behavior that can potentially result in you not being able to discharge your debts:

  • Hiding or destroying your assets within a year before filing for bankruptcy
  • Hiding or destroying assets that are under the legal right of the bankruptcy case after the bankruptcy case is filed
  • Hiding, destroying, falsifying or failing to keep records about your financial condition
  • Failing to satisfactorily explain a loss of assets before the filing of bankruptcy
  • Making a false oath

Bankruptcy is an unfamiliar and potentially uncomfortable process to go through without some experienced guidance. The written and oral questions that you’re asked can be very confusing. Even assuming you are completely honest, it’s easy to wonder if your answers are going to cause problems. If you live in the Dallas-Fort Worth metroplex, the attorneys at Fuller & Eason can help you discharge your debts. Please call us for a free, no-obligation, confidential consultation at 214-516-6187. Or you can reach us here. Thank you for visiting our website and blog.


The nightmare of student loans

One of the tragic fallouts of the economic malaise of the past few years has been the rise of the student loan crisis. Even before the recession, millions of hard working Americans were struggling to make student loan payments on the income they were earning. After the recession began, the situation got even worse as millions of Americans lost their jobs, had their pay or hours reduced or had to take a lower paying job after losing a great career. The crisis was compounded as millions of college graduates with thousands to hundreds of thousands of dollars in student loans tried to enter the workforce only to discover there were no jobs waiting for them. As of this writing, it is estimated that Americans owe over $1 trillion in student loan debt, and approximately 25% of student loan debt is in default. A recent study estimated that student loan debt creates a 4 trillion dollar drag on the economy, because an entire generation of Americans can’t buy homes or save for retirement due to their student loan burden. The problem is becoming generational because parents paying back student loans may not be able to save for their childrens’ education, forcing the kids into a cycle of high student loans as well.

If you are unable to pay your student loans, their may be options to help. The federal government has created 2 programs that base your student loan payment on your income. The programs are called the Income Contingent Repayment Program (ICR) and Income Based Repayment Program (IBR). Both of these programs recalculate your student loan payments on a payout of up to 30 years and base the payment on a formula using your income. For many borrowers with large student loans the IBR is often a better solution because the formula often results in a smaller payment than ICR. Under both programs, if you make your student loan payments for 25 years and have not paid them off, the balances are forgiven.

There are also limited circumstances where student loan debt can be forgiven after 10 years in repayment. Generally you have to work in certain types of public interest jobs and keep you loan current during the 10 year repayment period. In addition, the U.S. Army offers a student loan repayment program that offers repayment of up to $65,000.00 in student loan debt in exchange for 3 years of active duty service.

Depending on your circumstances, you may be eligible for deferments or forbearances which will give you temporary suspension of your monthly payments.

If you have exhausted your other options, you may be able to get relief from student loan wage garnishments, lawsuits and federal offsets by filing a chapter 13 bankruptcy reorganization plan. Under chapter 13, an automatic stay protects you from most collection activity while you repay part or all of your debts through a court approved repayment plan. While the student loans are not discharged, chapter 13 can give a student loan borrower a 3 to 5 year “break” from student loan collections, giving them breathing room to hopefully increase their income so that they can begin repaying the student loans when they emerge from bankruptcy.

Unfortunately discharging student loans is very rare in Texas, because the courts have interpreted the bankruptcy provisions related to student loans very harshly, so very few people can get even part of their student loans discharged. For some student loan borrowers, a chapter 7 bankruptcy can discharge other types of debts, such as credit cards, medical bills, pay day loans and personal loans, freeing up income to pay back student loans. The experienced and board certified bankruptcy attorneys at Bailey & Galyen can assist you with determining whether a chapter 7 or 13 bankruptcy may benefit your particular situation and provide some relief from your student loans.

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