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Procrastination

I am painfully aware of the temptation to put things off. It is an ailment that plagues us from an early age, continues throughout our lives and appears to be hereditary. This blog was to be done this week and it is now late in the week. It may be part of the human condition to procrastinate, but the cost can be extraordinarily high.

“I am going to lose my house on Tuesday.” Every month for the last 200 or so months I have heard that statement. Every month for the last 200 or so months I have been presented with limited options because they put off seeking legal help. “The bank’s modification program was a scam.” “They lost and I resent my paperwork three separate times.” “I was told I had to miss more house payments before they could help me.” “The company I hired in Plano or Clearwater or Armpit won’t return my calls and I received a foreclosure notice.” I do not doubt for a moment that most of what the potential client tells me is true, but they kept listening to people who proved to be untrustworthy and it may be too late.

If you are having financial difficulties, please do not put off getting help. An experienced bankruptcy lawyer will know your options and try to help you get out ahead of disaster. In my experience we delay seeking help because of our pride. If you visit with an attorney and they are rude or condescending they are not for you. Most of the consumer bankruptcy lawyers I know will listen and do their best to help, but our chances of getting this thing out of the ditch will sure get better if you quit waiting until the last minute.

Please schedule a free initial consultation to discuss your financial issues by calling us toll free at 800-215-9089. If you prefer, you can fill out our intake form, and we will contact you to schedule a consultation.

J. C. Bailey III

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It has just become a little easier to file Chapter 13 and you can keep just a little more in Chapter 7


On April 1 there were a few of small changes in bankruptcy law most of which do not affect that many people. On April first every three years certain amounts in the Bankruptcy Code automatically increase based on the Consumer Price Index.

One change that helps some consumers is the increase in the unsecured maximum debt limit in Chapter 13 from $360,475 to $383,175. Particularly some self-employed individuals may now be eligible to file Chapter 13 as the unsecured debt limited pushed upward.

Chapter 11 debtors should be aware of a bad change because the burdens of small business status now come for debtors who owe less than $2,490,925 rather than $2,343,300. Watch out because small business status used to be optional prior to 2005 but now it is more of a curse than a blessing and it is mandatory rather than optional.

The one change that is likely to affect the most debtors is the increase in the amounts under the federal bankruptcy code exemptions. The homestead exemption went up by $1,350, the automobile exemption went up by $275, total household good amounts by $725, jewelry by $100, tools of trade by $125, life insurance policies by $325, and personal injury claims by $1,350. Remember that married couples filing jointly can double the amounts and that very few people filing in Texas ever have to give up anything to the Chapter 7 trustee.

Also those who have owned their home less than about 4 years (as long as you lived in Texas two years before filing) now enjoy a $155,675 cap on their homestead exemption as opposed to the old $146,450. Most people who are our clients at Bailey & Galyen do not have that much home equity though, so this is seldom a problem.

Bankruptcy is a complex combination of law and numbers, so email or call us at 1-800-215-9098 to make an appointment with our attorneys about your situation so we can help you!

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Qualifying for Chapter 7

One of the changes in the 2005 landmark bankruptcy legislation was the concept of “qualifying” for Chapter 7. Previously, a debtor was eligibile for Chapter 7 relief if doing so was not a substantial abuse. This in turn came to mean, essentially, that if a debtor could pay his creditors in hypothetical Chapter 13, it would be an abuse to allow him to “walk away” via a chapter 7.

The 2005 amendments kept the spirit of the prior practice with the following structure, taking it from a case-by-case view to a more objective, formula-based approach.

Step 1: “Current Monthly Income”

If average income over the six months prior to filing is LESS than the average state income for the debtor’s household size, then it’s not an abuse to file chapter 7.

The determination of “income” and the applicable household size have major consequences and often require attorney interpretation.

Step 2. The Means Test

If current monthly income is greater than the state average, the means test — a formula to determine whether a debtor “should” have leftover income to pay creditors — is applied. Here, average household expenses and actual debt payments (for homes, cars, and other “keeper” debts) are subtracted from Current Monthly Income to see if there is a surplus. If there is a surplus of roughly $150.00 per month or greater, then it is presumed that filing a Chapter 7 case would be an abuse — because the debtor theoretically could pay his creditors SOME money.

Step 3: Special Circumstances

Sometimes, a debtor has unusual income or expenses. What if income is artificially inflated due to a one-time payment? What if a debtor has provable high medical or transportation expenses? Debtors that “flunk” the means test can try to prove these special circumstances as a way to rebut the presumption that their chapter 7 case is abusive.

Gene Sollows is the managing attorney for the Plano office of Bailey & Galyen.  His common sense, down-to-earth approach and empathetic bedside manner make him uniquely qualified to handle the family and financial problems of north Texans.

Three Reasons to File for Bankruptcy




Bailey & Galyen
Your Neighborhood Law Firm

The reasons people decide, after months and years of struggle, to file for bankruptcy are individual and unique. But for most people, it’s situational – an unexpected job loss, medical problem, or divorce has created financial chaos and an inability to pay debts. While the facts in your case are somewhat unique to you, the truth is that everyone who files a bankruptcy does so for one (or more) of the following three reasons:

Reason Number One: Only Bankruptcy Gets All of Your Creditors off Your Back Right Now

Until you downloaded this information, Creditors have outmaneuvered you, putting you right where they wanted. Creditors use bill collectors and attorneys (often paid on commission) to use all means at their disposal – legal or otherwise – to get their pound of flesh from you. This takes many forms:

• Threatening Phone Calls – to your home, work, neighbors, and relatives
• Threatening Letters
• In-person collection visits to your home
• Offers of “settlement” where they get into your bank account
• Repossession of cars and other personal property
• Lawsuits, judgments, and collections on judgments with garnishments and levies
• Foreclosure of your home and other real estate

Their only goal is to get your money. They are utterly uninterested in your personal situation (no matter how dire) and will do whatever it takes to get you to pay. They know something you don’t – that your money is a limited resource, and that they are in competition with other creditors for that resource. They think, if we don’t get their money now, someone else will. Creditors therefore have no qualms about upsetting you personally or ruining your life to collect the money owed them. And creditors don’t care if you don’t have the resources to hire an attorney to defend against their tactics. They don’t care about your sleepless nights and feelings of guilt or embarrassment.

But here’s the good news: a bankruptcy filing automatically stays (stops) all creditor collection activity – even lawsuits, repossessions, and foreclosures – immediately.

The automatic stay is powerful and only available in federal bankruptcy court. It goes into effective immediately, nationwide, and lasts for the duration of the case unless otherwise ordered by the court – a financial force field around you, your family, and your assets.

Reason Number Two: Bankruptcy Can Give You a Fresh Start

One of the biggest reasons non-bankruptcy options fail (such as debt settlement, credit counseling, and debt consolidation) is simply the lack of a “finish line.” For many people in debt, there is simply no end in sight. Whether your income is reduced or your expenses are stretching you to the breaking point, ask yourself: are you trapped in debt you can never repay? When is this nightmare going to end?

Debt is a burden. Its effects on your mental (and physical!) health as well as your personal relationships (with spouse, family, and friends) are well-established. Wanting relief from this burden is a natural, normal, and a positive reaction to a bad situation. This is why we have had bankruptcy laws in the United States since the founding of our nation – because we believe, as a country, that people are entitled to a second chance. Bankruptcy can help good people resolve bad situations.

If you are reading this, you have probably tried all other options to resolve your debts. Let’s go over traditional non-bankruptcy options and explain their shortcomings.

• Debt Settlement – requires a lump sum of money to settle for a portion of the total debt. To obtain this lump sum, you may have to save up – while the interest grows and lawsuits and other collection efforts ramp up against you. Debt settlement companies routinely charge $5,000.00 or more to negotiate your debts and require their fee up front. For most of our clients, the truth is harsh – if you had the money to pay your debts, you wouldn’t be reading this. And creditors won’t wait around for you to save up enough money to pay them a fraction of their debt.
• Debt Consolidation – this essentially refinances your debt into one payment with (ideally) a lower interest rate. This option assumes that (a) you have the credit and collateral (bank deposits, land, etc.) to get the loan and (b) you can afford a payment at the lower rate. If you had good credit and the ability to borrow your way out of your debt problem, you wouldn’t be reading this. For many of our clients, the problem isn’t just the interest rate, it’s the sheer size of their debts compared to their ability to pay.
• Credit Counseling – while credit counseling is effective for borrowers with a small amount of credit card debt, it simply does not work if you have a significant ($10,000.00 or more, typically) in credit card debt or if you have other debts. Credit counseling cannot resolve your medical bills, non-credit card balances (broken cell phone contracts, apartment leases, old repossessions, etc.), and of course debts owed for taxes, student loans, and child support. Simply put, in most situations credit counseling only works for folks with a small amount of credit card debt.

Bankruptcy will, in the vast majority of cases, give you a fresh start through the discharge – a court order that forever eliminates most debts. Wouldn’t it be nice to be permanently rid of your creditors so that you can rebuild your life and take care of your family?

Bankruptcy can permanently eliminate credit cards, medical bills, personal loans, debts from broken leases and contracts, repossession and foreclosure deficiencies, and many other kinds of debt. While some debts (notably IRS obligations, student loans, and child support) are generally not dischargeable, there are available bankruptcy options to deal with these debts as well – most notably, to set up a payment arrangement without any future interest or penalties.

Reason Number Three: Bankruptcy Can Help You Keep your Assets

Sometimes, creditors want more than your money – they want your house, your car, and your bank account. Depending on the type of debt involved, outside of bankruptcy this is unfortunately a fact of life. What can creditors do to your property?

• Foreclosure – In Texas, if you are in default, home lenders have the power to take your home from you after a fairly short period of time – without a court order. Certain other creditors (such as taxing authorities), after filing a lawsuit, may be able to foreclose your home as well.
• Repossession – Your car creditor can generally repossess your vehicle at any time you are in default – without a court order. Once repossessed, they can then sell it as soon as seven days later.
• Garnishment & Levy – While garnishment of wages in Texas is generally prohibited (other than for child support and taxes), after getting a judgment creditors can garnish bank accounts and other financial assets and seize personal property assets to be auctioned off to pay the debt.
• Abstract of Judgment – even if creditors can’t reach your assets presently, after a court order a judgment can be abstracted in the county records, impairing the legal title to your home and other real property. This means, as a practical matter, that it will be difficult to buy, sell, or refinance a home or other real property until the judgment is resolved.

Bankruptcy not only stops these collection activities– it protects your most important property, too. If you are eligible, Texas law allows you to protect your homestead, a vehicle for each driving-age member of your household, clothing, furniture, jewelry, household goods, retirement accounts, life insurance policies, and even family pets. And while these assets are also generally exempt outside of bankruptcy, only bankruptcy stops the collection activities against your property and allows you to discharge the underlying debts forever so that you will not face a garnishment of your bank accounts or have to deal with a judgment lien years down the road.

In bankruptcy, as long as you continue to make your regular installment payments on your home and car, those assets cannot be foreclosed or repossessed. And even if you are behind on these payments, a payment plan can be established in bankruptcy to catch you up and keep your property.

The next step – give us a call for a free consultation with a licensed attorney. Relief is literally one phone call away!

Get Creditors Off Your Back

Get a Fresh Start

Keep your Assets

Abuse of the Homeowner


In this article I explore how the mortgage industry abuses the homeowners before and then after a bankruptcy case is filed. Our homes are supposed to be our castles, yet if we are not careful, the mortgage companies can quickly dethrone us.

During these rough economic times, many of us can find ourselves facing financial difficulties at some point. It could be that there were unexpected medical bills, a business downturn or a loss of income. Sometimes, the mortgage “momentarily” takes a backseat to the emergencies in our life.

What we have seen practiced by some mortgage servicers is that, when a homeowner gets behind in payments, the servicer begins two processes aimed at protecting its interest in the property. On one hand, it may offer the owner an opportunity to refinance/restructure the note, and on the other hand, it may initiate foreclosure proceedings.

The difficulty for the homeowner is to understand that the loan servicer could be executing both processes in parallel. This confusion is due to misrepresentations or misunderstandings occurring during the frantic phone calls between the homeowner and the different service personnel in the servicer’s customer service department. The difficulty is made worse when the homeowner does not seek legal advice early in the process for a myriad of reasons, often involving pride in being able to handle one’s own problems.

Fortunate few, however, at some point before the foreclosure make themselves get legal advice that can save their homes. For others who try to work it out on their own, they sometimes learn after the fact that their homes were foreclosed on during the time that they were sending in the piles and piles of the paperwork required for refinancing, paperwork that the mortgage company conveniently loses.

Consulting with a bankruptcy attorney early in the process when a homeowner gets into financial distress can be beneficial more often than not. Bankruptcy attorneys can quickly develop insights into your situation and can plan actions to take so that an orderly bankruptcy process is undertaken. Most people do not like the stigma of filing for bankruptcy; however, those who truly consider all options will be more likely to come up with a better plan for getting a fresh start in life while keeping their home.

Review your cash flow situation months ahead if possible. However, if you foresee a negative cash flow situation, consider talking to a bankruptcy attorney prior to using up your savings and other resources that you and your family may need to meet your basic needs. The consultation is free and there may be other options. Until you sit down with an experienced attorney, you will not know if bankruptcy can help. Come see us.

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