How Bankruptcy Permanently Stops Foreclosure

How Chapter 13 Bankruptcy allows you to Permanently Stop a Foreclosure

Filing for a Chapter 13 Bankruptcy is one of the best ways to permanently stop a foreclosure.  The reason for this is simple:  because the creditors have no choice but to stop the foreclosure in the Bankruptcy and allow you to put together a “plan.” to stay in the house.

The Automatic Stay

The first reason why this works is the Bankruptcy Automatic Stay.  The Automatic Stay is like a stop sign that prevents creditors from taking any collection activity against you (with limited exceptions).  This includes anything from a phone call and letter all the way up to stopping a foreclosure action.  Once you file the Bankruptcy petition then the foreclosure action is STOPPED.

The Chapter 13 Plan

As the debtor you are responsible for submitting a plan or reorganization to your creditors.  In this plan you will let the creditor know how you plan to treat (or pay back) their claim.  When you are behind on your mortgage, and still desire to stay in the house, then you are required to pay back the arrears (what you are behind) back to the mortgage holder.  The good news about this plan is that you can take that amount an stretch it over a period of up to 60 months.  This allows a pretty good chunk of money to spaced out into much more manageable monthly payments.  This is beneficial for the debtor because most of the time the mortgage company will want the arrears to be paid back in a much faster time period.

As the Debtor you want this plan to be “confirmed” by the Bankruptcy Judge.  Once is is confirmed then the mortgage company has no choice but to accept this plan that you have proposed.  Here is what the Judge will want to see in order to “confirm” your plan:

  1. That you can afford to make the regular normal payments after the case is filed to the mortgage company.
  2. That you have actually made your payments to the mortgage company since the case was filed.
  3. That you can also afford to make your Bankruptcy plan payment.
  4. That you have actually made these Bankruptcy plan payments since the case was filed.

Example:

Joe has been served with foreclosure papers because he has missed he missed 6 months of mortgage payments from being temporarily unemployed.  He is behind $10,000 with interest penalties right now.  His normal monthly mortgage payment is $1500.

Joe can file a Chapter 13 Bankruptcy and stop the the foreclosure to keep his home.  Joe will have to show his budget to the Court which demonstrates he can pay his regular payment to the mortgage company ($1500) plus $167 extra per month to be paid through the Bankruptcy payment ($10,000 divided by 60 months).

Get a Free One on One Consultation

If you are facing a foreclosure and need help analyzing your options then contact us for a free consultation.   You can fill out our online contact form here or call 972-516-4255

Bankruptcy vs. Credit Counseling

Chapter 13 Bankruptcy Plano TXI have a tremendous percentage of my clients who come to me after having tried some type of credit counseling program.  The reaction is always the same — “I should have come to you first.”  The purpose of this post is to give you a sense of how credit counseling works and how a Bankruptcy works.  Hopefully this allows you to make an educated choice on what truly is the best way to move forward with your financial issues.

Credit Counseling

The basics of credit counseling are as follows:

  1.  You make monthly payments to a program provider.
  2. This program uses this monthly payments to build up a “slush fund.”
  3. This slush fund “settles” your accounts for less than full balance owed.

This seems great because you are paying less than what you actually owe the creditors (hey you are saving money right).  But here are the cons to going about it this way:

  1.  It is very expensive to do this (they generally take a cut or keep a certain amount of up front).  Most of the time these types of programs will cost you over five thousand dollars in fees.
  2. You are taxed on the savings.  So if they “save” you $10,000 then you will get a 1099c from the creditors meaning you pay taxes on that $10,000 next year.
  3. Your credit still goes down dramatically.  You aren’t making payments to the creditors so your score will still go down.
  4. Collection activity still happens.  You still get letters, phones calls, and can still be sued from creditors while in the program.
  5. It takes a long time to complete.
  6. You’re dealing with a big bureaucratic organization.

Bankruptcy 

Bankruptcy is federal law.  This means a couple of different things:  1) generally everyone is eligible for relief under the US Bankruptcy code via either a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy; and 2)  All creditors are required to operate under the umbrella of Bankruptcy and have no choice but accept the relief you are asking for (either within a 7 or a 13).  When dealing with unsecured debt, Bankruptcy looks at your income and and determines (based the income amount and your household size) how much, if anything, you can afford to pay back to your unsecured creditors.  If the formula determines you can’t afford to pay anything back then you are eligible for Chapter 7 Bankruptcy.  If you are not eligible for Chapter 7 then this same formula determines how much you are required to pay back to your unsecured creditors in a Chapter 13 Plan (most people pay back a percentage of what they owe in a Chapter 13).

Here are a few simplified benefits of Bankruptcy vs. Credit Counseling:

  1. The fees are a lot less.  Most Chapter 7 cases can get done for less than $2,000 and a Chapter 13 case is generally around $3500.
  2. There are no taxes paid on debts discharged in Bankruptcy.
  3. It is easier to gain/rebuild credit after a Bankruptcy discharge (a discharge is a Federal Court Order which means new creditors can see it know that you legally do not owe anyone else).  If they know you don’t owe anybody else then they aren’t competing for your dollars and are more likely to give you new credit to rebuild.
  4. Collection activity is required to stop.  Bankruptcy has a federal injunction that prevents collection activity once you file (no phone calls, letters, and even lawsuits have to stop).
  5. It can be extremely fast (Chapter 7 takes about 3 months).
  6. You are dealing with an attorney (we have a legal and ethical obligation to do our best for you, answer questions, and finish the job you hired us to do).

Summary

Once you’ve made the decision that you need to do something about your debt then do your research.  I’m not saying Bankruptcy is always the answer.  However, don’t ignore it just because you think it is a dirty word.  There is a reason why a lot of people try other things and then end up in my office.  Remember, Bankruptcy is federal law that was enacted for the general protection of the public.

 

Written by:

 

William J Collins

Partner at Collins & Arnove PC

william@wcollinslaw.com

972–516-4255 (office)

Offices at:  555 Republic Drive, Suite 200  Plano, TX  75074

                     107 N. Goliad St, Rockwall, TX  75087

How Attorney Fees Work with a Chapter 13 Bankruptcy

Greg Arnove Pic Board CertifiedA Chapter 13 Bankruptcy requires that you put together a “plan” that determines how various creditors or interested parties will be treated.  In this plan the client pays a trustee who is appointed by the Court.  The Trustee then distributes the money according to your plan.  One of the main benefits of Chapter 13 Bankruptcy is that it allows you to put your attorney fees inside of the Bankruptcy.  In the Eastern District of Texas and Northern District of Texas Division (most of all the DFW metroplex) the Court mandates the standard fee at $3500.  This $3500 excludes the Court filing fee for the case of $310.

Attorneys will vary the amount that they take “up front” for a Chapter 13 Bankruptcy.  You may see advertisements for $0 down or very little down for a Bankruptcy case.  Other attorneys might want to file the case for $1,000 to $1500 down.  Every attorney is different — but most will probably just get as much as they think they can get out of you up front.  Keep in mind that the $0 down advertisements can be slightly misleading because you would still be responsible for the filing fee to the Court of $310 and the cost for the attorney to pull your credit (generally anywhere from $30 to $50).

When the client hires the attorney the attorney should put any “attorney fee” portion in their trust account pending confirmation of the Bankruptcy case (confirmation generally takes 3 to 4 months).

— Example:  Client gives attorney $1,000.  The filing fee for the 13 is $310 and the cost for the credit report was $50.  Attorney should deposit approximately $640 into his lawyer trust account            (not his business operating account) pending confirmation of the case.  After confirmation the attorney can transfer the attorney fee portion ($640) info their operating account.

Generally after the case is confirmed, the Chapter 13 trustee would distribute any remaining balance of the $3500 attorney fee directly to the attorney without any future payments made directly from the client to the attorney.

What this means for the general person interested in a Chapter 13 Bankruptcy:

— You can get a Chapter 13 filed for a relatively small amount down

— You can get a variety of attorneys for the same $3500

 

Why you should use Collins & Arnove if you are considering a Chapter 13?

— We charge very little up front ($500 generally).  We don’t care about charging more up front because we have to hold the money in a trust account anyway.  Plus we want our clients to feel our interest are completely aligned (getting the case confirmed).

— For the $3500 you get a Board Certified Attorney who works on your case (we don’t hand you off to a paralegal and we don’t hire “coverage” attorneys to do your hearings.  Read more about being Board Certified here  Read more about hiring a Bankruptcy Mill here

 

Understanding Which Debts Are and Aren’t Discharged In Bankruptcy

Bankruptcy Allen TXIf you are experiencing financial distress due to the loss of income or developing an overwhelming amount of debt and monthly bills, bankruptcy may be an option for relief. While it is wise to weigh out the pros and cons with an attorney, you must understand which debts a Chapter 7 or Chapter 13 bankruptcy will discharge. Understanding the differences can help you decide not only if this is the right financial move for you and your family, but also if you should consider Chapter 7 or Chapter 13. Here is a quick breakdown of which debts are and are not discharged after filing.

Discharged In Both Chapter 7 and Chapter 13

To get started, you should learn the type of debt that will be discharged after filing either Chapter 7 or Chapter 13. These debts include the following:

  • Credit Cards
  • Medical Bills
  • Judgement Lawsuits
  • Personal Loans
  • Lease/Contract Obligatory Debts

There are exceptions to this rule. Certain debts will be discharged under chapter 13, but not chapter 7. Court fees, tax debts, marital debts that arise due to divorce,  HOA or condo fees, and debts from retirement fund loans will not be discharged after filing Chapter 7 bankruptcy.

Not Discharged

You may be surprised to learn certain debts will not be discharged. This can be troubling, but your attorney can help you through the process to design a budget that will accommodate these expenses. After filing chapter 7 or chapter 13, you will most likely be required to continue paying the following debts:

  • Child Support
  • Alimony
  • Fines/Penalties Owed After Breaking Laws
  • Certain Tax Debts
  • Payments/Debts Paid to Person Injured/Killed Due to Your Fault

Under Chapter 7, you will also need to continue paying HOA and condo fees and debt from retirement fund loans.

Student loans and traditional income tax debt will not be discharged unless you can prove exemptions apply. This will require you to ask the court for special permission to have these debts discharged after filing Chapter 7 or Chapter 13.

Also, during the process of filing, certain creditors may ask the court to reconsider the discharging of your debt. Debts that arise due to malicious, fraudulent acts, such as larceny, embezzlement, or mortgage/credit card fraud, committed by yourself may be included in this category. Creditors will also most likely not permit debts not included on your original filing paperwork to be discharged.

Restoring your financial health is possible with proper understanding and the help of professionals. To learn about the different bankruptcy laws and possible discharged debts, contact Collins & Arnove in the Allen, TX area at 972-516-4255.

Collins & Arnove | Bankruptcy Allen TX | 972-516-4255

Steps to Rebuilding Credit after Chapter 13 Bankruptcy in Dallas, TX

Chapter 13 Bankruptcy Dallas TXFiling for Chapter 13 bankruptcy can be a scary chapter in anyone’s life. While the situation may feel out of your control, there are things you can do to rebuild your credit and restore financial health. Keeping your house and your assets are within your reach with the help of Collins & Arnove, your partners with chapter 13 bankruptcy in Dallas, TX. There are steps you can take today to work towards a better financial future.

  1. Give yourself a time frame. Bankruptcies may only show up on your credit for up to 10 years, and chapter 13 cases usually do not last that long (they may last around five years). Start working on improving your credit with the goal that, by the time your bankruptcy is wiped from your slate, you are in a better place than when first filed for bankruptcy. Having a goal as a reminder will help you in making decisions that will benefit you in the long run.
  2. Check your credit reports often. Sometimes, errors that are not your fault can occur on your credit report. Checking to make sure everything looks correct will help you in understanding your score and making sure you are not losing points for reasons that are not your fault. Working with a personal bankruptcy lawyer in Dallas, TX can save you money and hassle when it comes to looking over your reports.
  3. Learn how spending affects your credit. No matter what situation occurred, filing for Chapter 13 bankruptcy means that you should handle your credit score with care. Buying with the intention of improving your score can help you slowly work your way back up to financial ease. Use a credit card and make sure you can, and do, pay the full balance each month on time. Knowing the interest rates of the cards you do have can help you identify which cards to use and which ones to either get rid of or save for emergencies only.
  4. Stay out of debt. This may seem like an obvious point, but it is crucial not to get in over your head financially after dealing with bankruptcy. Spending money on a new phone or a weekend trip may seem like a small reward, but keeping your credit card provider or bank from having to deal with further debt can make your life that much simpler. Having a personal bankruptcy lawyer in the Dallas, TX area can help you stay on track with a budget plan and offer further financial advice.

While filing for bankruptcy may seem like hitting rock bottom, there are steps you can take to climb up and stand on financially solid ground again. No matter your situation, though, no one should go through it alone. For help and reassurance, talk to Collins & Arnove, your partners when it comes to chapter 13 bankruptcy in Dallas, TX. Give them a call at 972-516-4255 or visit their website at http://www.northtexasbankruptcy.com/.

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

The Basics of Bankruptcy in Allen, TX and What to Know Before Filing

Bankruptcy Allen TXIf you’re considering bankruptcy, there are things you need to know. The first thing you’ll need to decide is which bankruptcy to file.

In a Chapter 7 Bankruptcy, you can discharge your unsecured debt. Secured debt may be sold by the trustee to pay off the debt. Keep in mind that you’ll be able to keep one car and one home. The trustee may sell additional vehicles or second homes.

In a Chapter 13 Bankruptcy, the courts will often set up a payment plan so that you’ll pay back your creditors and keep everything you have.

There are other types of bankruptcies, but the Chapter 7 and 13 are common for individuals.

The first thing to do before filing bankruptcy in Allen, TX is to stop obtaining more credit and call Collins & Arnove.

Collins & Arnove | Bankruptcy Allen TX | 972-516-4255

Tips & Tricks to Rebuild Credit After Filing Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Allen TXFiling Chapter 7 bankruptcy may be an option to consider if you are drowning in debt that you are unable to pay due to the loss of income or other financial issues. Not only will this filing reduce your monthly bills and free up much-needed income, but bankruptcy also stops harassing calls and letters from creditors. Bankruptcy will affect your credit score for seven years, but you can rebuild your credit slowly. Here are a few step-by-step tips to rebuild your credit after filing bankruptcy.

Organize Finances and Set a Budget

Chapter 7 is a liquidation type of bankruptcy, which wipes out unsecured debt, such as credit cards or medical bills. While you will no longer have this debt, you will still need to pay certain expenses each month.

Your attorney will discuss the importance of paying your rent or mortgage, auto loans, utilities, and insurance premiums promptly each month. After filing bankruptcy, make sure to organize all of your finances and determine a budget to ensure you do not go beyond your means again. Setting a budget will reduce your risk of further credit complications.

Apply for a Secured Credit Card

After losing control of your finances and credit accounts, you may never want or need a credit card again. However, applying for a secured credit card is an important first step for rebuilding your credit after bankruptcy. Of course, you may not be familiar with this type of account.

Contact your bank to apply for a secured credit card. You will need to pay a cash deposit to receive this credit card. This deposit will serve as your credit limit. Use this credit line to make and then quickly pay off small purchases to help reestablish your credit after filing bankruptcy.

Unfortunately, there are a few negatives associated with secured credit cards. In most instances, your bank will charge you an application fee and a small annual fee each year. Also, interest rates are much higher on secured credit cards compared to traditional credit accounts, so it is important to make sure you make and subsequently pay off small purchases before interest accumulates.

Open a New Bank Account

If you do not have a checking or savings account, make sure to open one while you are at the bank applying for your secured credit card. Make small deposits into your account upon opening and continue making deposits each week or month. Setting up automatic withdrawals is a great way to improve your ability to save, but avoid making excessively high deposits that you may not be able to afford every month. Opening a new account shows credit stability, which is imperative for rebuilding your credit after filing chapter 7 bankruptcy.

To learn more about Chapter 7 bankruptcy and to rebuild your credit, contact Collins & Arnove in Allen, TX at 972-516-4255.

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

When and If You Should Notify Your Bankruptcy Attorney of a Pay Raise

Bankruptcy Allen TXLiving with the inability to pay debt and your basic living expenses can be overwhelming, but millions of people are able to find relief through bankruptcy. During a chapter 13 filing, your attorney will work with creditors on your behalf to design a monthly repayment plan for these debts. While based on your current income and living expenses, the monthly payment will be set during the initial proceedings. Once filed, you must understand when and if to notify your attorney about an increase in your income. This guide will help explain the process of chapter 13 repayments and what to do if you receive a raise or additional income.

Chapter 13

During the consultation, your attorney will discuss the best option for reorganizing your debts using a chapter 13 filing. This will involve a repayment plan, broken down into monthly payments over a period of up to five years. The total monthly payment will go towards all of your outstanding debts, discussed with your attorney.

The monthly payment will be based on a few factors, including your monthly income after taxes, health insurance and basic living expenses. This is known as your disposable income. In most cases, this monthly plan will be sufficient for paying off a portion of the total debt, but not the entire balance.

After Filing

Once you enter into chapter 13 bankruptcy and begin making your monthly payments, you will need to provide your attorney will an income statement each year. This statement will be given to the courts, who will then determine if you are still capable of making your monthly payments.

Income Changes

If your income has decreased after filing, the monthly payments can be renegotiated and decreased. On the other hand, an increase in your income will require a renegotiation and possible increase, as well.

It is also important to note that if your income has decreased or increased before the annual report is given to the courts, you must notify your attorney.

After an increase in your income, the courts will decide if your monthly payment needs to increase. An increase in your monthly payment will only occur if your income has increased significantly.  However, your attorney is legally obligated to notify the courts of any income changes before and during a chapter 13.

To learn more about chapter 13 and other bankruptcy options, contact Collins & Arnove in the Allen, TX, area at 972-516-4255.

Collins & Arnove | Bankruptcy Allen TX | 972-516-4255

Can Filing for Bankruptcy Help with Student Loans?

Bankruptcy Allen TXWill filing bankruptcy help with my student debt? How do I qualify for filing bankruptcy for my student loans? What are my options besides filing for bankruptcy?

Student loans are hard to get rid of. However, about 40% of those that file will get at least a partial discharge. You may qualify if you demonstrate that those payments keep you from living a “minimal” standard of living, that you’ve made good-faith efforts to repay your loans, or that your disabilities will keep you from making payments for a long time. On the other hand, you still have some options besides filing for bankruptcy, including consolidation, repayment, and deferment options.

We are Collins & Arnove, your trusted bankruptcy attorneys, and counselors in Plano and Allen, TX.

We want to help you with your student debt problems.

Visit us at http://www.northtexasbankruptcy.com/

Collins & Arnove | Bankruptcy Allen TX | 972-516-4255

Advice from a Personal Bankruptcy Lawyer on Car Repossession Rights

Personal Bankruptcy Lawyer Plano TXFew things are as frightening as personal bankruptcy, but your bankruptcy lawyer in Plano, TX can help you understand your rights when your personal assets run out.

One of the more devastating aspects of bankruptcy is the repossession of items that you have defaulted on. If a creditor has a lien on your vehicle, they can claim the vehicle if you fail to make payments. So how does the process work, and how will a personal bankruptcy lawyer in Plano, TX advise you in a repo situation?

When Will Authorities Repossess my Car?

Repo agents won’t confront you or take a car from your garage–in fact, that’s illegal. It’s their job to track your use of the car though, and they will snatch it from you when you’re not expecting it. They can (and will) take your car while you are in a restaurant, shopping for groceries, or performing errands.

In fact, personal bankruptcy lawyers in Plano have experienced repo agents taking cars from individuals’ driveways–and that is completely legal.

What If I “Walk in on the Agents” While They are Taking my Car?

“The repossession may not be done if there is a breach of the peace,” said Gerry Beyer, professor of law at Texas Tech University.  “If the vehicle owner ‘pitches a fit’ breaching the peace, the repossession must stop.”

That’s why repo agents will take the car when you aren’t around and when you least expect it. But if agents can’t enter your garage or “breach the peace,” couldn’t a car owner in default simply continue to hide the car or pitch fits to the agents?

Withholding Collateral is a Crime

Unfortunately, you won’t get the green light on withholding collateral from a personal bankruptcy lawyer. Plano, TX doesn’t see this situation much, but laws are in place to deal with obstinate car owners who have defaulted on payments.

First, a court can issue a “Writ of Sequestration,” which is effectively a warrant against your vehicle. This is only a civil mandate resulting from a lawsuit, but pitching a fit or hiding the vehicle will no longer work.

Secondly, Texas has a law entitled “Hindering Secured Creditors” — this takes the issue out of civil courts and makes it a criminal offense. If you hide the car, damage it, or obstruct the creditors, you could face legal punishment.

What Happens After the Car is Repossessed?

“The owner [sometimes] thinks that if the repossession takes place, he/she is ‘off the hook,’” says professor Gerry Beyer. “The owner does not understand that the creditor will sell the car and that the owner remains responsible for the deficiency. Most car buyers are ‘underwater’ – that is, they owe more on the car than it is worth.”

Per Texas law, the creditor must inform when the sale of your vehicle will happen. This allows you to put the money together to reclaim your vehicle.

If you don’t pay for it, though, a sale will take place, and the vehicle will likely sell for less than the value you still owe. That leaves you on the hook for the remaining balance.

Despite the trauma of losing your vehicle, you do have financial options on the table. A personal bankruptcy lawyer in Plano, TX can help you navigate those options, make good decisions in the future, and rebuild your credit.

Collins & Arnove | Personal Bankruptcy Lawyer Plano TX | 972-516-4255

Texas SEO - Texas Bankruptcy