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.


Foreclosure: the danger of just walking away

As the economy staggers along in its fifth year of recession, foreclosures continue to pile up across America among the supposedly well-off and struggling alike. For some, it was too much house for the budget — for others, job losses, divorce, and medical expenses have prevented homeowners from making their regular house payments. While it’s a bounty for real estate scavengers and others that make a living in real estate transactions, it’s a real dilemma for someone deciding whether to keep their home or walk away — and how to best accomplish that task.

One choice that some are making — and an ill-informed one, at that — is to simply walk away from their homes. In this instance, the lender eventually takes physical possession of the home and holds a foreclosure sale. Upon the lender’s transfer of home ownership to a third party buyer, the sales price is applied to the debt (including attorney’s fees, foreclosure costs, make-ready, etc.) and the remaining balance — called the “deficiency” — remains owing by the borrower. The deficiency may then be collected like any other debt, by lawsuit and other means. The lender may also tag you with an IRS form 1099 for “forgiveness of debt” income — meaning you may have to pay taxes on the amount of the lender’s losses. This can easily add up to thousands of dollars or more in tax liability.

A short sale — selling a property to a third party for less than the amount owed on the mortgage(s) — is sometimes attempted to avoid a foreclosure. The borrower’s motivation here is generally to avoid having a foreclosure appear on his credit report. The borrower generally receives no cash or other compensation for going through the substantial effort to market his house, and the lender gets roughly the same payment they would receive in a foreclosure, without the additional expenses. The true beneficiaries of a short sale transaction are the parties involved in processing the transaction (realtor, buyer’s mortgage broker, appraiser, title & escrow company, etc.) and the buyer, who is essentially obtaining a property at a foreclosure price without competition from other prospective purchasers. What’s more, the borrower still faces the same deficiency issues as if he had walked away — resulting in potential tax liability and collection efforts. Also, more and more creditors are viewing short sales transactions with the same negative weight as a foreclosure.

By contrast, bankruptcy provides more breathing room at the front end and freedom from the deficiency at the back end. The bankruptcy stay can provide a temporary stop to foreclosure proceedings and give you an orderly way to relocate without the pressure of an impending foreclosure and eviction. At the end of your case, your bankruptcy discharge will, in the vast majority of cases, wipe out all the remaining debt owed to the lender — with no tax liability.

Lastly, through the use of a chapter 13 bankruptcy plan, you may be able to actually stay in your house and pay the mortgage arrears over time on your schedule, rather than that imposed by the lender.

Give us a call today if you’re facing a foreclosure and unsure how to proceed.

“Can I Keep My Stuff?”

“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 be based on 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 401ks, 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), such as 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 non-exempt 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.

Texas: ‘Miracle’ or Myth?

What does it mean to be a middle class wage-earner and consumer in Texas?

For too many families, it means a struggle to make ends meet. Texans want safe, stable jobs with decent wages and reasonable benefits that allow them to raise a family, own a home, and save for a comfortable retirement. Much has been made lately about job growth in Texas. Unfortunately, for middle class Texans, the so-called “Texas Miracle” has been more myth than reality. So, how does Texas stack up to the rest of the nation on key quality of life indicators?

So, how about those jobs? Texas has the highest rate of workers paid at or below the federal minimum wage and our median hourly wage is 10% lower than the national average. We are dead last in the percent of Texans with health insurance and are near the bottom in the percent of workers with employer-based health insurance.

As for workplace safety, nine Texans die on the job every week, making Texas the deadliest state to work in, according to data from the Bureau of Labor Statistics. We also have the highest rate of workplace fatalities among the 10 biggest states. Also, with a quarter of workers without workers’ compensation coverage, we are last in workers’ compensation coverage, lagging far behind the rest of the country.

And home ownership? Texas ranks near the bottom in the rate of home ownership, a fact that is exacerbated by our high rates of personal bankruptcy, low personal credit scores, and high rates of foreclosure and subprime mortgages. Plus, with the highest home insurance rates in the nation, more of our money is going to pad insurance company profits.

Finally, what about that comfortable retirement? It isn’t so comfortable. Texas ranks near the bottom in median household net worth and in the “nest egg index” which looks at personal savings and investing behavior. Also, nearly half of middle income Texans report having less than $5,000 in total savings – over a quarter have less than $1,000.

This stark reality is compounded by a lax regulatory climate that typically favors industry over individuals and a broken civil justice system that is too often closed to consumers, patients, and workers who face needless injury and financial devastation. That’s right. If you are hurt on the job, ripped off by your insurance company, or have your savings wiped out by Wall Street shenanigans, you likely won’t be able to have your day in court.

Not quite the picture of middle class bliss that many politicians and spinmeisters would have us believe.

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