Repayment Options to Pay off Your Chapter 13 Bankruptcy

Chapter 13 Bankruptcy McKinney TXFiling for bankruptcy may seem like you’ve hit the end of your rope, but it does not need to be scary. When you have the right help, filing for chapter 13 bankruptcy in McKinney, TX is an attainable goal instead of an overwhelming situation. There are five things to know about your repayment plan when you file for chapter 13 bankruptcy:

  1. Some things must be paid off in full. You must pay back certain fees and claims 100%. Knowing what you need to pay off will help you prioritize your payment plan. You need to pay bills such as administrative claims, filing fees, and attorney fees in their entirety. You must also pay in full all child support, wages to employees, and most tax debts.
  2. Repayment of unsecured debts varies. Depending on your situation, unsecured debts may not need to be paid off. Payment requirements depend on many factors, including the value of your property, the amount of disposable income you have, and the length of your payment plan. Having a personal bankruptcy advisor in McKinney can help you to distinguish what debts to pay in full.
  3. Use all disposable income. You must use all of your disposable income to maximize your payments, pay all your debts and dig yourself out of bankruptcy. Debts your leftover income may go to include credit card bills, debit card bills or medical bills. Disposable income, though, should be noted as the money left over after paying off expenses such as car loans or mortgages.
  4. The length of repayment may vary. Each case and situation are different. Repayment plans will vary in length depending on your income level. If your median income is greater than the average monthly income for your house, the repayment plan for you must last five years. Otherwise, having an income less than the median average will require a plan lasting three years.
  5. You may keep your property. Unlike filing for a chapter 7 that surrenders your home, filing for chapter 13 bankruptcy in McKinney means that you can keep your property. Repayment happens solely from your leftover income instead of your property value. However, you must pay creditors at least the value of said property to complete the repayment option.

Figuring a repayment plan after filing for chapter 13 bankruptcy can be feasible with the right mindset and the right help. If you need assistance financially, let Collins & Arnove help you get your life back. To learn more, call 972-516-4255 or visit http://www.northtexasbankruptcy.com/.

Collins & Arnoe | Chapter 13 Bankruptcy McKinney, TX | 972-516-4255

Attorney Explains Differences in Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 Bankruptcy Allen TXWhen faced with the possibility of filing for bankruptcy, it is important to fully understand and survey all of your options. A trustworthy attorney is vital in helping you choose what type of bankruptcy filing works best for your individual situation. The team at Collins & Arnove can advise you in filing for either Chapter 7 or Chapter 13 bankruptcy by explaining the differences in each type of case. The chapter of bankruptcy for which you choose to file will depend on your income, assets, debts and financial goals. If you’re considering filing or just beginning your bankruptcy research, refer to this helpful guide outlining the differences between Chapter 7 and Chapter 13 bankruptcy. The following list will break down each chapter of bankruptcy by the areas in which they differ.

  • Type of bankruptcy. Chapter 7 bankruptcy is considered liquidation, while Chapter 13 focuses on the reorganization of finances and assets.
  • Type of filer. Both individuals and business entities can file for Chapter 7, but Chapter 13 bankruptcy is restricted to single filers only.
  • Eligibility determinations. Those applying for Chapter 7 bankruptcy must have a disposable income low enough to pass the Means Test. Chapter 13 bankruptcy requires that filers have no more than $394,725 of unsecured debt or $1,184,200 of secured debt.
  • Discharge process lengths. Chapter 7 bankruptcy quickly discharges in three to five months, while Chapter 13 will usually take three to five years. This time estimate is contingent upon the completion of all plan payments.
  • Property disbursement. Chapter 7 filings allow a trustee to sell all nonexempt property to pay creditors. However, in Chapter 13 cases, debtors can keep all property, but they must pay creditors an amount equal to the value of their nonexempt assets.
  • Lien stripping. Chapter 7 bankruptcy does not warrant removal of unsecured junior liens from real property through lien stripping. Contrarily, Chapter 13 does if all requirements are satisfied.
  • Principal loan balance reduction. Once again, Chapter 7 bankruptcy denies the use of a loan cramdown to reduce the principal loan balance, while Chapter 13 allows it if all requirements are met.
  • Benefits. Chapter 7 allows debtors to discharge quickly and get a fresh start. On the other hand, Chapter 13 allows debtors to retain their property and catch up on nondischargeable priority debt payments (mortgage, car, etc.).
  • Drawbacks. The main drawback of Chapter 7 bankruptcy is that it does not provide a way for debtors to catch up on their missed payments to avoid things like repossession or foreclosure. Chapter 13 bankruptcy can be challenging because it requires debtors to pay a trustee monthly for three to five years, as well as requiring them to pay back a portion of their general unsecured debts.

Just as with every legal case, all bankruptcy filings are different. The outline above is not meant to serve as legal advice. Instead, it serves as a starting point and general explanation to help potential filers understand how these two types of bankruptcy differ. If you or someone you know is considering filing for bankruptcy, consult with the professional team at Collins & Arnove today. Visit us online here http://www.northtexasbankruptcy.com/ or call for a free consultation 972-516-4255.

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

4 Ways to Rebuild Your Credit After Filing For Bankruptcy

Bankruptcy Allen TXFiling for bankruptcy in Allen, TX gives you that clean financial slate, but there is also that fear that your credit will now be in shambles for forever. The impact that bankruptcy will have on your credit will fade as the years pass, and there are things you can do to help. Here are four ways to rebuild your credit after filing for bankruptcy:

  • Secured loans
  • Secured credit cards
  • Co-signed credit card or loan
  • Authorized user status

All is not lost with a bankruptcy filing, and the attorneys at Collins & Arnove can help get you the best possible outcome. Call us today to schedule a consultation at (972)516-4255 or visit us online at http://www.northtexasbankruptcy.com/.

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

Attorney’s Top Tips to Avoid Chapter 7 Bankruptcy Dismissal

Chapter 7 Bankruptcy Garland TXWhen filing for Chapter 7 bankruptcy, there are many tasks and responsibilities to juggle. Finding a reliable bankruptcy lawyer makes a significant difference regarding how successfully and smoothly the process goes. One of the primary concerns you should focus on is the risk of bankruptcy dismissal. Many times, dismissal results from an honest mistake or when someone accidentally skips a step when filing or proceeding in court. At Collins & Arnove, our experienced team is well-aware of the many processes, rules, and requirements regarding a bankruptcy case. We want your case to process as quickly and painlessly as possible, so we’ve comprised a list of the most common reasons Chapter 7 dismissals.

Fraudulent Actions

In a Chapter 7 bankruptcy case, there are two primary reasons a court may determine that you have committed fraud.

First, the court may accuse you of fraud if you have attempted to transfer or destroy any of your assets up to a year before filing or any time after that. This includes actions like transferring a vehicle title to a relative with the intention of keeping that asset out of your bankruptcy case.

The second action that may lead the court to accuse you of fraud concerns misinformation. Fraudulent actions include lying about your financial information or lying in attempts to conceal information. Sometimes, a case will be dismissed on account of fraud because the debtor simply forgot to list an asset when filing, so it is imperative that you are extremely thorough and honest about your financial situation.

Unfortunately, even unintentional fraudulent actions can result in dismissal, so it is important to consult with your bankruptcy attorney to ensure you have completed all paperwork thoroughly and honestly. Furthermore, be sure to clarify what actions you can and cannot take regarding your assets in a bankruptcy case.

Refusal to Comply

In a bankruptcy case, compliance includes a variety of actions one must take or paperwork they must provide for their case. Here are some of the most common compliance issues that lead to dismissal of a bankruptcy case.

  • Not attending required credit counseling
  • Failing to file all of the required bankruptcy forms
  • Failing to pay the court filing fee
  • Not providing all requested documents to the court
  • Failing to appear at the meeting of creditors

It’s easy to overlook many of these factors accidentally. To ensure you have completed all of the necessary steps and followed protocol, we recommend partnering with an experienced and meticulous bankruptcy attorney who can assist you in the filing process.

Lack of Eligibility

The primary issue that leads to the court determination of ineligibility is the Bankruptcy Means Test. The test looks at both your income and your household expenses to determine whether or not there is enough money left over to pay creditors. In some cases, debtors who do not qualify for Chapter 7 filing based on this test end up filing for Chapter 13 bankruptcy instead. However, every case is different, so it is prudent to check with your attorney before deciding to alter your filing.

Collins & Arnove protects their clients to make sure they are successful in their bankruptcy cases. To learn more about bankruptcy laws, or to schedule a free consultation with us, visit http://www.northtexasbankruptcy.com or call 972-516-4255.

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

The Chapter 13 Claims Process

In a Chapter 13 Bankruptcy there is a claims process that occurs among the parties.  In simplicity it works as follows:

— the creditor receives notification of the Bankruptcy from the Court

— the creditor files a “proof of claim” with the Court showing the debt and proof of how it is owed

—  during the case the debtor pays a trustee who holds the money

— the trustee will the disburse the funds according to the terms of the plan

This is the process explained in its most simple form.  From a debtor’s perspective — it is pretty easy as you just make the payments. You as the debtor sit back and relax and let the attorneys, trustees, and creditors deal with the details.  However, I’m going to explain two common mistakes that I see in this process and why hiring the right Bankruptcy Attorney can and does make a difference in what happens in your case.  As I’ve explained in another post located HERE — every Chapter 13 attorney gets paid the same amount (with limited exceptions).  So you might as well hire one who has a proven track record of doing a good job.

Scenario #1  — The Filing of a Mortgage Arrears Claim with Interest

As the Chapter 13 Debtor you have the ability to pay back your mortgage arrears over a long period of time.  So during this process the mortgage company will file a proof of claim showing the exact amount that you are behind.  The mortgage arrears should be paid back at 0% interest as the arrears amount already includes unpaid interest.  However, when the mortgage company files the claim they put the interest rate of the loan.   Unfortunately, due to the way the form is set up the trustee will pay the claim with interest.

How Collins & Arnove fixes this:  We file an objection to the mortgage claim.  The mortgage company never objects and the mortgage arrears is paid back with zero percent interest.  

MANY MANY other attorneys will not bother with the filing of this objection.  Why — because the attorney gets paid the same amount whether they file the objection or not.  I’ve even some other attorneys set up their client(s) plan to already include the interest on the arrears (talk about not working for you)!   

Many times filing the objection won’t make a tremendous difference in a case (another reason why some attorneys won’t file the objection).  However, many times it can and does.  Some examples would be when that money is being taken away from other things that need to be paid (like or IRS debt) or not going toward things that might survive the Chapter 13 discharge (like student loans).

Scenario #2 — Debts beyond the statute of limitations

In a recent Supreme Court case,  Midland Funding LLC v. Johnson, the Court ruled that it is legal for a creditor to file a claim beyond the statute of limitations.  Here in Texas, the statute of limitations for most voluntary consumer debt is 4 years.  It is common practice for companies called “factoring companies” to buy the debt for pennies on the dollar and then try to collect upon it.  As part of this process they will file a claim with the BK Court hoping to get paid as part of a plan.  I see mistakes here in other cases as other attorneys routinely just do not analyze proofs of claim to see if they are beyond the statute of limitations.

How Collins & Arnove fixes this.  Again — we will file an objection to the claim and serve it on the creditor.  It is then up to them to prove that the claim is valid.  Once we file an objection they generally never pursue it (because they know it isn’t valid and were trying to sneak it in anyway) and the claim is now dead.  The debt will still be discharged in the Chapter 13 process.

 Again, sometimes not filing this objection may not have made a difference in your case.  However, many times it will.  This is especially true for individuals with high income who are paying a large percent of their creditors back.  It also makes a difference if you have things surviving the discharge (student loans) or if you need as many dollars as possible going to things like the IRS, mortgage arrears, and secured debt in your plan. 

Conclusion

These are just a couple of examples of things that the right attorney can take care of in this process.  Generally, all attorneys are paid the same amount in a case as it Court mandated.  You can read about this HERE.  At Collins & Arnove we review all the proofs of claim to make sure they are being paid correctly and to YOUR best benefit.  

Written by:

William Collins

 

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

3 Property Code Exemptions to Protect Your Assets During Bankruptcy

Bankruptcy Dallas TXFiling for bankruptcy in Dallas, TX is a nerve-wracking ordeal, but Texas is one of the best states in which to file bankruptcy. Texas Property Code exemptions are extremely generous, so you can protect all of the assets you wish to retain. Here are three property code exemptions that will serve to help protect your assets:

  • Homestead exemption to retain your primary residence
  • Personal property exemption to retain up to a dollar amount depreciated fair market value of personal property
  • Retirement plan exemption for qualified retirement plans such as 401(k)s and IRAs.

To understand how this applies to your particular situation, let the qualified attorneys at Collins & Arnove help. Give us a call today at (972)516-4255 or visit us online at http://www.northtexasbankruptcy.com/.

Collins & Arnove | Bankruptcy Dallas TX | 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

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