Understanding Texas Bankruptcy Exemptions

“Will I lose it all?” is one of the first questions individuals ask when considering filing for bankruptcy. However, bankruptcy laws allow for protection of certain types and amounts of the debtor’s property.

Choosing Federal Or Texas Bankruptcy Exemptions

Each state handles bankruptcy exemptions differently. Some states allow debtors to choose between using the federal bankruptcy exemptions or the state’s exemptions.

Other states only allow debtors to use that specific state’s exemption. Texas allows debtors to chose between either the federal or state exemptions.

The key is, however, once the debtor chooses one set of exemptions, he or she cannot pick and choose to use exemptions from the other list.

The State of Texas is fairly generous in the exemptions available per state law, so many debtors filing for bankruptcy in Texas choose to utilize what the state has to offer.

Exemptions For Married Couples

If a married couple is filing a joint bankruptcy, each spouse is entitled to claim the exemption for any property that is owned jointly. By doing this, couples filing bankruptcy are able to double the exemption amount available.

The Homestead Exemption

Texas has an unlimited amount of homestead exemptions for a residence on 10 acres of land or less in a city, village or town, or the exemption could be used for a home on 100 acres or less in the country, 200 acres for families.

If the debtor sells his or her house, the proceeds of the sale are protected for six months after the sale, as well.

Motor Vehicle Exemption

Under Texas law, the debtor is allowed to exempt the entire value of one motor vehicle per licensed household member. A vehicle can also be exempted if the household member does not have a license but relies on someone to drive the vehicle for him or her.

Personal Property Exemptions

Personal property can also be exempt under Texas bankruptcy law. The amount of personal property cannot be more than $100,000 per family or $50,000 for a single adult with no family. Anything above that amount would be considered nonexempt.

Personal property can include the following:

• Up to two firearms;
• Sporting or athletic equipment;
• Sacred religious books, including Bibles;
• Home furnishings, including family heirlooms;
• Jewelry can be exempt, so long as it does not go over 25 percent of the total exemption amount;
• Pets and domestic animals;
• Food;
• Clothing;
• Money in a health savings account;
• Health aids; or
• Burial plots.

Retirement Accounts Or Pensions

Tax-exempt pensions and retirement accounts are considered exempt on both the state and federal exemption list. Texas also has a specific list of retirement accounts that are exempt, including the following:

• Retirement accounts and pensions for Judges
• Pension and retirement accounts for county and district employees
• Law enforcement and firefighter retirement or pension accounts;
• ERISA-qualified benefits for government or church employees;
• Survivor benefits for law enforcement officer, firefighters or emergency medical personnel;
• Police officer retirement benefits or pension accounts;
• Government employees, elected officers, and state employees’ pension or retirement benefits;
• Teacher retirement or pension benefits; and
• Tax-deferred retirement benefits.

Insurance Exemptions

In addition, certain insurance benefits are also exempt, especially if these benefits fall under one of the following categories below:

• Fraternal benefit society, such as the Elks, Freemasons or Knights of the Columbus, insurance benefits;
• Benefits received from life, health, accident insurance or annuities, including money or policy proceeds due or paid to an insurance beneficiary or to the insured directly;
• Texas employee uniform group insurance benefits;
• Group insurance for Texas employees;
• Group insurance for Texas public school employees;
• Employee benefits for employees of a Texas state college or university;

What Is Not Exempt?

Under Texas exemption laws, proceeds received by the debtor from a lawsuit are not considered exempt. Further, unlike other states, Texas does not offer a wildcard.

These types of exemptions are available in some states to protect any property that was not previously considered exempt. Texas does not offer this added protection.

If the debtor considers this needed in his or her case, that person may consider using the federal exemptions instead, as the wildcard exemption is available per federal bankruptcy law.

It is encouraged that the debtor talks with a bankruptcy attorney to see if this is necessary.

Contact Collins & Arnove Today

Facing a bankruptcy can be a complicated process. We are here to walk you through it every step of the way. If you need assistance, the attorneys at Collins & Arnove can help you. To learn more and to schedule your free consultation, call (972) 544-4540 today.

7 Debts That Cannot Be Discharged In A Texas Bankruptcy

For the most part, bankruptcy results in the discharge of debts owed by the person filing the bankruptcy. In a perfect world, the debtor could walk away with a completely clean slate and no debts.

However, some simply cannot go away, no matter what type of bankruptcy is being filed.

1. Child Support Or Spousal Support

One of the main debts that will not be discharged in any bankruptcy case involves child support or spousal support. These obligations normally cover what public policy and the courts believe is enough to meet the basic living requirements for the debtor’s minor children or former spouse.

Because these obligations are issued by the court for this support and are considered a matter of important public policy, bankruptcy courts do not discharge these debts once the bankruptcy is finalized.

In fact, these obligations are not even part of the automatic stay started once the filing is made.

2. Income Tax Debts

Bankruptcy will not discharge money owed under income taxes, although it may seem like a tempting possibility. Even if it were possible for the debtor to get his or her unpaid income tax debt discharged, getting to that point is tough and requires a great deal of proof of undue hardship.

3. Other Government Obligations

In addition to income taxes, other liabilities owed to the government, including fines or penalties, will not be discharged.

These debts are obviously given priority since they are owed to the government, and the government does not want debtors to use bankruptcy as a means to gain the system. Therefore, they stay with the debtor.

4. Student Loan Debt

Similarly, student loans are not dischargeable through bankruptcy for the most part.

These debts may not be considered “priority” or be secured or attached to an asset, but unless the debtor can show that he or she has an “undue hardship” in them not being discharged, which is difficult to do, these debts will follow them once the case is finalized.

5. Debts For Personal Injury Or Wrongful Death Caused Due To Intoxication

Public policy requires that certain debts stay on a debtor’s record and not be discharged. Child support is one of these, but so are any debts or judgments the debtor owes due to a personal injury lawsuit or wrongful death lawsuit caused due to the intoxication of the debtor.

The law takes these matters very seriously and requires the debtor to hold true to these debts even if he or she is facing default and bankruptcy.

6. Debts From Fraud, False Representation, Or False Pretenses

If the debtor obtained certain debts through dishonesty or fraud, these debts may not be able to be discharged. One of the main reasons for this rule is that many individuals try to “work the system” and purchase items or build debt when they have no intention of paying them.

However, the key is the creditor has to dispute the debt being discharged for this to happen. Unless the bankruptcy trustee has any reason to believe that a debt was obtained through fraud, the debt would normally be discharged.

It would only be until a creditor files an official objection to a debt being discharged that it could be flagged as the product of fraudulent acts or misrepresentation.

7. Debts Not Listed In Asset/Debt List

When the debtor files for bankruptcy, he or she has to fill out a great deal of paperwork which involves listing all assets and debts he or she has and submitting proof of these debts for the bankruptcy trustee to review.

If the debtor has an asset case where money is available to distribute to creditors from that asset, and he or she does not list it or the corresponding debt, that obligation cannot be discharged. All debts must be listed when filing for bankruptcy.

If a debtor leaves a debt out intentionally, all that can result in is the bankruptcy court denying the petition completely. In the end, it is best to be honest from the beginning and list all debts that are on the debtor’s record.

Contact The Bankruptcy Team Of Collins & Arnove Today

Facing a bankruptcy can be an intimidating process. We are here to help you through it. If you have any questions about what debts can be discharged in bankruptcy and what debts must stay on your record, Collins & Arnove can help you.

To learn more and schedule your free consultation call (972) 544-4540 today.

4 Reasons Bankruptcy Can Be Denied In Texas

If an individual is facing financial difficulties and gets to the point where her or she feels like no other option is viable other than filing for bankruptcy, the last thing he or she wants to even consider is the possibility that bankruptcy could be denied.

However, circumstances do exist where a bankruptcy petition may be denied. Below are some of the most common reasons.

1. Inadequate Documents Submitted

The debtor is asked to present certain documentation to the court when a bankruptcy petition is filed. The bankruptcy trustee needs to see a complete picture of the debtor’s financial situation before deciding how to go forward.

This documentation can include paycheck stubs, statements from banks or other financial situations, mortgage documentation, car loan documentation or lease documents, tax returns from previous years.

It is important that all of this documentation, including anything that may be requested on top of the basic information. If the debtor fails to require the correct documentation, provides incorrect or insufficient information, the bankruptcy petition may be denied.

2. Filing Too Soon

Timing is everything when it comes to bankruptcy, as well. If the debtor has filed bankruptcy previously and files again, if it is done too quickly under statutory guidelines it is possible that the petition could be denied.

If the debtor filed Chapter 7, he or she has to wait at least eight years from the date that discharge was received before Chapter 7 bankruptcy can be filed again.

If he or she wants to file Chapter 13 bankruptcy after receiving Chapter 7 bankruptcy, at least four years has to pass before Chapter 13 can be filed.

Under Chapter 13 bankruptcy, if the debts were discharged in a previous Chapter 13 case, the debtor cannot receive a subsequent discharge in a later Chapter 13 unless it is filed at least two years from the date the first case was filed.

If the debtor received a discharge in a previous Chapter 13 proceeding, he or she must wait at least six years from the date the Chapter 13 was filed before he or she can file for and receive a discharge in a later Chapter 7 bankruptcy case.

3. Fraud Or Concealing Information

A bankruptcy petition can be denied if the debtor is using the bankruptcy proceed to perpetuate some form of fraud. Many times, debtors do use these proceedings to try to avoid a debt unfairly.

When the bankruptcy petition is filed, the trustee also asks the debtor to testify regarding his or her case and financial situation. The trustee will ask for specific information, and it is extremely important that this information must be complete and 100 percent accurate.

If the trustee later finds out that the trustee failed to disclose important information or intentionally withheld, the petition can be denied. Also, the petition could be denied if the debtor tries to hide money in other accounts or fails to list a creditor who ends up having a valid claim.

If the debtor ended up not providing this information unintentionally, this error can be explained or a petition could be filed later with the inadvertently left-out information included.

4. Not Taking the Required Instructional Course

The United States Bankruptcy Code requires that two instructional courses must be taken before bankruptcy can be finalized. These classes focus on personal financial management and aim to avoid the debtor having to file for bankruptcy in the future.

The first course is a credit counseling class that must be taken before the debtor can start the bankruptcy proceedings. The second class is a financial management course that must be taken and completed during the bankruptcy case. It must be completed before a discharge will be issued.

The fees to take these courses can range between $20 to $100, and while, yes, the bankruptcy debtor may find these fees hard to pay given his or her financial situation, the cost of having to go through the entire bankruptcy proceedings again can be even more cost-prohibitive.

These classes may seem minor in the grand scheme of things, but not receiving a bankruptcy discharge because the debtor failed to take a simple course is not worth it in the end.

Contact Collins & Arnove Today

Facing a bankruptcy can be an intimidating process. We are here to walk you through it every step of the way. If you need assistance, Collins & Arnove can help you. To learn more, call 972-435-9738 for your free consultation today.

Understanding The Role Of The Bankruptcy Trustee

When it comes to bankruptcy proceedings, many different individuals are involved in the process: the debtor, the creditor, often the debt collector, and, of course, the bankruptcy trustee.

However, many individuals fail to understand the role of the bankruptcy trustee. Below is some information to explain what role the trustee plays in all bankruptcy proceedings.

The Role of the Bankruptcy Estate

Before the role of the bankruptcy trustee can be understood, the bankruptcy estate must be understood, as the bankruptcy trustee maintains control over the estate. When a bankruptcy petition is filed, the “bankruptcy estate” is established.

This estate includes all of the debtor’s property and is considered separate from the actual bankruptcy debtor. The bankruptcy trustee also oversees the estate and ensures that property and debts are handled appropriately

The Role Of The Bankruptcy Trustee

What the bankruptcy trustee does depends largely on the type of bankruptcy being pursued. The role also depends also varies depending on the circumstances of the debtor as well as the types of creditors involved.

Chapter 7 Bankruptcy And The Bankruptcy Trustee

Chapter 7 bankruptcy is otherwise known as the liquidation bankruptcy. All of the debtor’s property and debts are accumulated and assessed, and at the end of the proceedings, the qualified debts are liquidated.

Therefore, the primary duties and powers the bankruptcy trustee holds include:

  • Rounding up the debtor’s property;
  • Receiving and reviewing the information submitted along with the debtor’s petition for bankruptcy, as well as creditor’s claims;
  • The trustee is responsible for selling the bankruptcy’ estate property that is not otherwise connected to a secured debt;
  • He or she is responsible for challenging claims of creditors, when and if it is appropriate;
  • Once the estate property has been sold, the bankruptcy trustee distributes proceeds to applicable creditors;
  • If grounds exist, the bankruptcy trustee is in charge of objecting to a bankruptcy discharge.
  • The bankruptcy trustee also reports directly to the court on the progress of the bankruptcy, as well as any claims creditors may have.

Chapter 13 Bankruptcy And The Bankruptcy Trustee

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy is referred to as a reorganization bankruptcy. The debtor keeps possession of the property during the bankruptcy, and the trustee works with him or her to come up with a repayment plan to handle these debts appropriate.

The duties of the trustee include the following:

  • The trustee reviews all of the information submitted by the debtor with his or her bankruptcy petition;
  • He or she also reviews all claims made by creditors, handling them appropriately;
  • The trustee reviews the debtor’s proposed repayment plan;
  • If changes are needed, he or she makes objections to the plan and makes needed changes;
  • The trustee also receives or collects payments from the debtor under the repayment plan;
  • The trustee then redistributes the payments to the creditors, as they are received.

Bankruptcy Trustee Compensation

How the bankruptcy trustee is compensated depends on the type of bankruptcy that is being filed. If the matter is a Chapter 7 bankruptcy, debts are paid off by liquidating property that is deemed nonexempt.

The trustee receives an initial payment under a flat administrative fee to oversee and review the case. This fee is normally paid from the debtor’s initial filing fee.

If the debtor requests a waiver of the fee, the trustee does not receive an administrative fee if that is approved. He or she will instead be paid from a commission from any nonexempt property sold to creditors.

If the debtor does not have any nonexempt property, he or she will only be paid via the administrative fee.

However, before the trustee can be paid at all, over the initial administrative fee, he or she is required to file an application with the court and notifying all interested parties.

Under Chapter 13 bankruptcy, since the trustee does not sell off the debtor’s property, he or she does not get a commission from selling any property.

Instead, he or she is allowed a percentage of the monthly payment plan as compensation. The percentage he or she is allowed depends on the trustee’s operating budget.

Contact Collins & Arnove Today

Facing a bankruptcy can be an intimidating process. We are here to walk you through it every step of the way. If you need assistance, Collins & Arnove can help you. To learn more, call 972-435-9738 for your free consultation today.

Considering Chapter 13 Bankruptcy? 3 Important Benefits to Know

Chapter 13 Bankruptcy Plano TXIf you have recently lost a main source of income due to unemployment, injury, or a medical condition or you have become overwhelmed by debt and expenses, filing chapter 13 bankruptcy may be right for you. Chapter 7 liquidates your debts, which is extremely helpful for most people, but not everyone will qualify for this form of bankruptcy. Thankfully, there is an alternative. Here are a few benefits of filing chapter 13.

Shorter Effect on Credit

Filing bankruptcy will negatively affect your credit. When filing chapter 7 to liquidate your debts, the bankruptcy will remain on your credit report for up to 10 years.

Since you will be making payments on your debt after filing chapter 13, the bankruptcy will affect your credit report for around seven years. The impact on your credit report and overall credit score will be less when filing chapter 13.

Avoiding Foreclosure

You may have an enormous amount of debt, which can include credit cards, loans, and medical bills in addition to a house. In most cases, chapter 7 will liquidate these debts, but it will not stop a foreclosure from happening if you are behind on your mortgage payments.

Filing chapter 13 bankruptcy will help you avoid foreclosure, allowing you to keep your home because you will continue making monthly mortgage payments through a debt restructuring program.

By paying off your debt with more affordable payments, you will be able to catch up on late and missing mortgage payments, allowing you to remain in your home without fear or worry.

Lower Payments/Less Stress

Financial worries cause stress and anxiety disorders and depression. While shocking for many to learn, severe financial struggles can even develop into thoughts and attempts at suicide. Easing this emotional distress is possible through bankruptcy.

The restructuring of debts that occurs in chapter 13 reduces your monthly payments and total payoffs, which also benefits your physical and emotional well-being.

Making small monthly payments to pay off smaller balances through the debt restructuring program of chapter 13 will ease the financial burden that affects your mood and stress or anxiety level.

Lastly, the ability to make one payment to a bankruptcy trustee is also helpful for easing the stress of paying multiple creditors month-to-month.

Filing bankruptcy is not for everyone, but an attorney can help you determine if it is right for you and your finances. To learn more about chapter 13 bankruptcy in the Plano, TX area, contact Collins & Arnove today at 972-516-4255.

Collins & Arnove | Chapter 13 Bankruptcy Plano TX | 972-516-4255

Understanding The Automatic Stay

When it comes to filing for bankruptcy, one of the benefits for potential filers is the automatic stay.

If someone gets to the point where the debtor feels he or she has no choice but to file for bankruptcy, it is a safe assumption that he or she is at the point where relief from financial stress is needed.

Thus, enters the automatic stay. However, not everyone understands what the automatic stay entails and how it plays into the bankruptcy process.

What Is An Automatic Stay

When bankruptcy is filed, an automatic stay is issued. This “stay” puts a halt to collection activities against the debtor facing bankruptcy. It begins at the start of the case and lasts until the case is closed, either successfully or unsuccessfully.

The automatic stay is immediate, meaning it happens as soon as the case is filed. However, it is then up to the bankruptcy trustee to notify creditors of the case, which is not immediate. This means that the creditors will be subject to the automatic stay before they even get notice of the case.

It keeps the creditors from pursuing collection attempts on the debtor and does a number of other actions, described below.

1.) Prevent Foreclosure: The automatic stay puts a halt to any foreclosure proceedings that are currently ongoing. This happens, even if the debtor waits until the last minute to file for bankruptcy after the foreclosure proceedings have begun.

In the event a Chapter 13 bankruptcy is being filed, late mortgage payments are lumped into a three to five-year repayment plan created with the help of a bankruptcy trustee. This allowance lets the debtor stay in the home while the proceedings are ongoing.

2.) Halt Eviction Proceedings: If the debtor is also facing eviction proceedings for not paying rent, the automatic stay puts a stop to that process, as well. This stay can alleviate a lot of stress on the debtor by keeping a roof over his or her head.

However, if the judgment on eviction proceedings has already happened before bankruptcy was filed, the landlord could still file a motion to lift the automatic stay.

3.) Stop Vehicle Repossession: The automatic stay can also put a halt to any vehicle repossession process. Without a car, how can the debtor keep going to work on a daily basis to get back on his or her feet?

This benefit is huge when it comes to filing for bankruptcy. If Chapter 13 is being filed, the stay can also allow the debtor to keep the car in the end upon the close of the three to five-year repayment plan.

4.) Stop Wage Garnishments: An automatic stay also puts a halt to wage garnishment proceedings with a few exceptions. These exceptions include ones where matter of public policy prevent them from being stopped, such as child support or alimony payments.

A creditor does have the right to file a motion to lift the stay but they must show that good reasons exist to justify this lifting of the stay.

5.) End Collection Harassment: Debt collectors can be harassing. One of the biggest causes for stress on debtors is the constant phone calls and letters from debt collectors.

The stay also puts a stop to these actions, and if a creditor violates the stay, that company faces penalties or fines.

Limitations To The Automatic Stay

If this is not the debtor’s first bankruptcy, he or she may face some limitations to the automatic stay. If repeat filings have occurred, the stay may only last for 30 days.

In addition, creditors do have the right to file a request to lift the stay, and if valid and compelling reasons exist, they may be successful. However, if the debtor is a first-time filer, it is unlikely the stay will be lifted.

What Happens If the Stay Is Violated?

If the creditor violates the stay, he or she will face certain consequences, which can include fines and sanctions.

In addition, if a bankruptcy trustee is notified repeatedly of violations from the same lender, and this is an a repeat occurrence with many debtors, the trustee can go as far as sending the matter to the United States Department of Justice for investigation.

Contact Us Today!

Facing a bankruptcy can be an intimidating process. We are here to walk you through it every step of the way. If you need assistance, Collins & Arnove can help you. To learn more, and schedule your free consultation, call 972-435-9738 today.

Five Real Benefits of Filing Chapter 7 Bankruptcy to Clear Debt

Chapter 7 Bankruptcy Dallas TXWhether you have lost a primary source of income or accrued an overwhelming amount of debt, filing chapter 7 bankruptcy may be the right decision for you and your financial future. Unfortunately, most people do not have a real understanding of the bankruptcy process and benefits. Here are a few practical benefits that you will see after filing chapter 7.

Clean Slate

First and foremost, it is essential to know that chapter 7 gives you a clean slate. This liquidation type of bankruptcy wipes out all of your debt, allowing you to make a fresh start when it comes to your finances.

While chapter 7 bankruptcy will discharge most of your debts, you may still be responsible for paying certain expenses, such as student loans, child support, and alimony. Your attorney will help you create a budget that will allow you to continue paying these expenses in a timely and efficient manner.

Property Protection

You will be able to keep all income and property that you acquire after filing since this property and income will not be part of the bankruptcy agreement. All income and property acquired after 180 days of filing will be protected.

No Limits

If you file chapter 13, there are limits to the amount of debt that can be discharged. When you file chapter 7, there are no limits on the total amounts of discharged debt as long as you pass the means test.

No Repayments

Filing chapter 7 bankruptcy will liquidate your debts, meaning you will not have to make payments towards the total debt. This process is different from chapter 13 where you will be responsible for making payments each month to pay off balances. After filing chapter 7, you are no longer responsible for making debt payments.

Effective and Fast

You may be surprised to learn how quickly debts are discharged once you start the process of filing chapter 7.

In most cases, your debts will be discharged within three months of filing. The courts will discharge your debts effectively and efficiently, reducing harassing calls and collections from creditors and decreasing any stress and anxiety you may be experiencing.

If you are searching for an effective and fast way to manage your financial future, chapter 7 might be the right solution for you.

Consulting an attorney should be your first step if you are considering bankruptcy. To learn more about the benefits of chapter 7 bankruptcy, contact Collins & Arnove in the Dallas, TX area at 972-516-4255 today.

Collins & Arnove | Chapter 7 Bankruptcy Dallas TX | 972-516-4255

Why Involuntary Bankruptcy Cases are Rare in Personal Bankruptcy

Personal Bankruptcy Wylie TXAlmost all personal bankruptcy cases in Wylie, TX are considered voluntary, or when the debtor decides to file for bankruptcy on their own. An involuntary bankruptcy case is when the creditor decides to file a bankruptcy case against a consumer.
Here are the reasons why these cases are so rare:

  • It is difficult for a creditor to meet the criteria to be eligible to file.
  • Because of bankruptcy protections for consumers, creditors fare worse than debtors.
  • If the court dismisses the case, the creditor may be responsible for attorneys’ fees, costs, and compensatory and punitive damages.

Get all of your bankruptcy questions answered by the experts at Collins & Arnove. Call today at (972)516-4255 to schedule a consultation or visit us online at http://www.northtexasbankruptcy.com/.

Collins & Arnove | Personal Bankruptcy Wylie TX | 972-516-4255

5 Answers To Chapter 7 Bankruptcy & Wage Garnishment Questions

By the time an individual faces Chapter 7 bankruptcy, he or she may have a couple of judgments against him or her for previous unpaid debts.

In fact, many of these judgments may have already gotten to the point where wages are being garnished from the debtor’s paycheck.

What happens to these garnishments once Chapter 7 bankruptcy is filed?

1. What Is Chapter 7 Bankruptcy?

Two different types of bankruptcy are commonly used by debtors facing tough financial situations. Chapter 13 bankruptcy involves a reorganization of the client’s debt, resulting in a payment plan and eventual liquidation of whatever debts are remaining at the end of the payment period.

Chapter 7 bankruptcy is referred to as “liquidation” bankruptcy. When bankruptcy is filed, an automatic stay is put in place. This automatic stay puts a stop to any legal proceedings or debt collections that are current against the debtor.

At this point, all creditors will receive notice of the filing and the automatic stay and will be given a chance to file a claim with the bankruptcy trustee. The trustee works with creditors on their claims, and any debts that are not exempt or unsecured are liquidated.

2. What Is Wage Garnishment?

Wage garnishment is when money to collect upon a judgment is taken out of an individual’s paycheck. Wages cannot be garnished without a court order authorizing the garnishment.

One of the most typical types of wage garnishments involve child support. However, student loans and taxes are also traditionally enforced through a wage garnishment or income withholding order. Other debts can be collected in this manner, as well, so long as the order is signed and authorized.

After the judgement is obtained, it is then sent to the debtor’s employer and the judgment will then automatically be taken out of the person’s paycheck in the appropriate amount.

Once the debt is satisfied, the withholding ends. Limits do exist as to how much can be taken from the employee’s paycheck so that the entire check is not depleted because of a judgment.

3. What Is an Automatic Stay and How Does It Affect a Bankruptcy?

The automatic stay is one of the benefits of filing for bankruptcy. By the time the debtor gets to filing, he or she is probably at his or her wit’s end in terms of financial stress. This stay is supposed to relieve part of that stress.

The automatic stay keeps the creditors from taking debt collection proceedings against the debtor while the bankruptcy is pending. Since wage garnishments come from collection proceedings, these garnishments are also halted when the automatic stay is issued.

However, not all wage garnishments can be stopped. Child support is the most important of these garnishments that are not allowed to be halted.

Creditors can petition the court to have the stay lifted, but the circumstances for these allowances are limited.

Unless the garnishment comes from a matter where public policy is an issue, such as child support, the garnishment will normally be halted with the filing of a bankruptcy petition.

4. What About The Notice Of The Automatic Stay?

Who has the responsibility of notifying the employer of the automatic stay when it is issued? Will it be the debtor or the bankruptcy court who will inform the company? Normally the bankruptcy court notifies the employer of the automatic stay.

The bankruptcy trustee gets all of the information on who the creditors are, as well as their contact information, and they use this information to provide notice.

5. What Happens To The Wage Garnishment Once The Case Is Closed?

It can be assumed that the automatic stay goes away once the case goes away. A lot hinges on why the income withholding order was issued and what debt is associated with it.

If the wage garnishment came along with a normal collections action and this creditor was included on the debtor’s list supplied to the bankruptcy trustee, the wage garnishment will go away when the debt is liquidation.

However, if the bankruptcy case ends early and unsuccessfully, then the wage garnishment goes back into effect. If the case is closed successfully and the debt is liquidated, so is the garnishment order.

Contact Collins & Arnove Bankruptcy Attorneys Today

Facing a bankruptcy can be an intimidating process. We are here to walk you through it every step of the way. If you need assistance, Collins & Arnove can help you. Call 972-435-9738 today for your free consultation.

The Complete Process of Filing Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Dallas TXConsulting an attorney is a great first step if you are considering filing chapter 13 bankruptcy to gain back control of your financial health. Unfortunately, you may not realize there are other steps in the process once you decide to file. Your attorney’s help will guide you through the legal process of filing chapter 13.

Credit Counseling

Once you decide to file, you will need to enroll in a credit counseling course. The course must be completed at least six months before filing bankruptcy.

While it is required, the credit counseling class will also be helpful in teaching you the importance of budgeting and how to use credit to your advantage.


Once you complete the counseling course, you and your attorney will work together to design a repayment plan. This plan will include the total amount of debt you will pay back over a period of 5 to 7 years. The proposal will also include your monthly payment, which a bankruptcy trustee will disperse to creditors.


Once the proposal is in place, your attorney will file the chapter 13 bankruptcy petition along with your recent tax returns. The court system will appoint a trustee to administer your case.

The trustee will review your case to ensure you have met all laws and requirements.

Automatic Stay

If you have met all the requirements, your trustee will notify your creditors about your bankruptcy filing, and an automatic stay will then go into effect.

The automatic stay prevents your creditors from collecting. Also, interest and late fees will stop once the automatic stay is in effect.

341 Meeting

The meeting of creditors, which is also known as the 341 meeting, will occur next. This session allows you, your trustee, and creditors to discuss the payment arrangements that will happen once the bankruptcy is confirmed.

Confirmation Hearing

Your attorney will be obligated to attend a confirmation hearing. The hearing is where you and your attorney will learn a final decision on your bankruptcy. Once the plan is confirmed, your bankruptcy will be in place.

The hearing will also be the start of your repayment plan. Making your monthly payments to your trustee on time is essential. If you default on payments according to the bankruptcy plan, legal action will be taken by the creditors and the court system.

You should understand the entire process of filing bankruptcy. To learn more about filing chapter 13 bankruptcy, contact Collins & Arnove in the Dallas, TX area at 972-516-4255.

Collins & Arnove | Chapter 13 Bankruptcy Dallas TX | 972-516-4255

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