0

Really? I Can Do That With A Bankruptcy?

Really? I Can Do That With A Bankruptcy?

Most people are aware that they can use a bankruptcy to prevent a foreclosure or to keep a car from being repossessed. They are also aware that bankruptcy is great for getting rid of debt that cannot be paid such as deficiencies from repossessed cars and houses, huge medical and credit card debt and other such situations that people would consider “in the norm.”

It may really shock people to find out that a person can get their suspended driver’s license back when they file bankruptcy in some situations. This is the common scenario that can happen: A person has been having real problems financially. They decide that in order to put food on the table, they need to skip a car insurance payment. The car insurance is cancelled. Well, of course there has to be an accident once the insurance is cancelled. That is the theory of Murphy’s Law— “Anything that can go wrong, will go wrong” Worse, the accident is that person’s fault. So, they have a bill for about $22,000 they have to pay. They are responsible for the damages to the other automobile and the medical debt, if any. The insurance company for the other party will do two things. They will sue the person who caused the accident and then report to the State of Texas that there is no insurance. The State of Texas will suspend the Driver’s License for failure to be financially responsible for their actions. Yes, the person should have had the insurance, but sometimes life happens and bad things really do happen to very good people.

That person can certainly file bankruptcy to eliminate the $22,000 in debt. What many people do not realize is that filing bankruptcy will also lift the suspension of the driver’s license (if no alcohol is involved) as well! The reason is fairly simple. The license was lost because the person failed to be responsible for the debt and the suspension is in place until the debt is satisfied. As bankruptcy will eliminate the debt, the debt is then satisfied and there is no legal reason for a suspension to remain in place.

Bankruptcy can do other things as well. In a recent case filed, the owner of a club was behind on his fees and taxes to the State of Texas. The Texas Alcohol and Beverage Commission (TABC) came into to yank the license from the bar owner. He filed a Chapter 13 bankruptcy to reorganize the debt and to pay it. The TABC cannot then take the license and in effect take away the ability of the person to make a living.

Clients are often faced with huge garnishments on their wages from the IRS, Attorney General or for unpaid student loans. While those types of debts are usually not dischargeable, the garnishment itself can be stopped. Sometimes, a plan can be put into place that allows those debts to be fully paid. Sometimes it is just a matter of getting rid of the credit card debt and other obligations to free up money to be able to pay those huge debts that simply will not go away.

If you are facing an unusual financial situation that you think might be benefited by filing a bankruptcy, give us a call at (800) 215-9089 or email us. We offer a FREE, no-obligation consultation. We can explain the bankruptcy and non-bankruptcy options as well. Give us a call and let us try to help.

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

0

Common Bankruptcy Myths

Many people who could benefit significantly from the federal bankruptcy laws fail to do so because of mistaken beliefs about the process. This page dispels many of the common myths surrounding bankruptcy.

1. Myth: Your credit will be ruined and your credit score will fall dramatically if you file for bankruptcy.
Reality: You can do as much, if not more, damage to your credit rating by having your credit cards maxed out and paying all your bills late. You can even bring your score down by having too much credit, even if you are paying it all in a timely manner. Most creditors will consider you a better credit risk after a bankruptcy because you have a clean slate, with significantly less debt.
2. Myth: You will lose everything if you file for bankruptcy protection.
Reality: Most states allow you to keep some value in your home, as well as your vehicle and other personal items. There is also a federal exemption amount for interest in a home.
3. Myth: You must be destitute to file for bankruptcy protection.
Reality: You don’t have to wait until you have been sued for non-payment or face repossession, garnishment or foreclosure to file for bankruptcy protection. Under the revised bankruptcy laws, you cannot file under Chapter 7 unless you can show the court that you lack the means to repay your creditors over a three-to-five-year period. But you can initiate bankruptcy proceedings if you can demonstrate that you have no way to repay your creditors.
4. Myth: You can max out your credit cards and discharge the debt in a Chapter 7.
Reality: You cannot discharge certain types of credit card charges or cash advances made in proximity to your filing. If it can be shown that you intentionally charged items or took cash advances knowing you would be filing for bankruptcy protection, you can be charged with criminal fraud. The bankruptcy court may also decide to dismiss your petition as fraudulent.
5. Myth: Filing for bankruptcy protection can cost you your job or your apartment.
Reality: Even if your employer or landlord found out that you had filed for bankruptcy protection, they will likely prefer that to your prior status. Your employer would rather have someone focused on the job instead of personal financial problems. Your landlord would rather have you paying them than your creditors.
6. Myth: Everyone will know that you filed for bankruptcy protection.
Reality: Even though the bankruptcy records are public, few people ever see them. These records are generally viewed only by potential creditors. If you have filed for bankruptcy, they will need to be notified anyway.
7. Myth: Bankruptcy is a sign of failure.
Reality: Bankruptcies result from many factors, including the loss of a job, health issues or divorce. Some of the most successful people in history have filed for bankruptcy protection, including Donald Trump.

At Bailey & Galyen, our bankruptcy lawyers have extensive experience handling all types of bankruptcy issues, including the following:

We will take the time needed to listen to your situation, understand your concerns and answer your questions. You should obtain the information you need to make an informed decision about bankruptcy and your future.

Contact a Texas Consumer Bankruptcy Specialist and Business Bankruptcy Lawyer

If you would like to obtain additional information about Texas bankruptcy, explore your options, learn about the bankruptcy process or discuss your particular situation with an experienced Texas bankruptcy attorney, please schedule a free initial consultation by calling us toll free at 877.345.6767 (Dallas – Ft. Worth area), 866.715.1529 (Houston area) or 866.678.1900 (South Texas). If you prefer, you can also fill out our intake form and we contact you to schedule a consultation.

Free Initial Consultations
Multiple Office Locations
Flexible Payment Plans
After-Hours and Weekend Appointments
Se Habla Español