Filing Texas Chapter 13 Bankruptcy for Unsecured Debts

November 17, 2010

The problem many of us in Texas have goes beyond paying the mortgage. We have medical bills, credit card bills, car payments, tuition fees, regular weekly expenses which simply will not go down. So what are your options? Recently on Higgins And Associates we went over filing Chapter 7 bankruptcy in Texas for unsecured debts – monies owed on your credit card, outstanding medical bills, etc. This guide will focus on filing Chapter 13 at a time when it can benefit you the most.

What are unsecured debts?
Unsecured debts are monies owed on items you stand to lose if you don’t pay – like your home, car, boat, valuables like jewelry, entertainment items like an expensive TV, etc. These may be taken if you default on the bill.

What about your home?
If you fall behind in mortgage payments, you have options even after the foreclosure process begins. But, and this is important, if you file after the process begins you can only buy time to find a new residence. The Texas Homestead Exemption protects your home from being taken for most debts, except your mortgage lender. The lender can take the home if you default on the payments. On the other hand, if you file Chapter 13 bankruptcy before the foreclosure begins, you will at a minimum buy yourself some time, and if you can afford to continue making some payments, you can likely keep your home.

The Car
With Texas exemptions, you can keep up to $30,000 in assets as an individual or $60,000 as family when filing bankruptcy. This includes your car, but other items too, like jewelry or your TV.

Are you eligible?

According to USCourts.gov, “Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400.”

How much will Texas bankruptcy cost?

To file Chapter 13 bankruptcy with a Texas court, you pay a $274 filing fee. (If you file Chapter 7, the fee is $299.)  Before this, you want to consider whether or not you need a professional bankruptcy lawyer. Unless you are a bankruptcy lawyer, you should hire one. The fees vary, but usually amount to $1,000 to $2,000. If you have a lot of secured debt, and stand to lose your valuable home, this fee is minor in comparison to the benefits of filing.

Why not Chapter 7?
You may get more benefits from Chapter 7, but if you make higher than the median income of Texas, you won’t be eligible. However, if you’re unemployed and/or have little income, you may not be able to afford a repayment plan. While Chapter 13 has some advantages, you have to pay your debts. If you have both options, ask your lawyer what would be best for you.

Texas Bankruptcy Options – Advantages of Chapter 13 Over Chapter 7

November 15, 2010

Even the federal government points out the advantages of Chapter 13 bankruptcy when compared to Chapter 7. While both have advantages and disadvantages, and though Chapter 7 is more common, there are some clear reasons for filing Chapter 13 in Texas. This guide explains them.

First, as noted on USCourts.gov, “chapter 13 offers individuals an opportunity to save their homes from foreclosure.” How? If you’re in danger of foreclosure, if you’re behind on payments, Chapter 13 can help. Say you have a Fort Worth home, you are behind on payments, but you have an income. In this situation, Chapter 13 bankruptcy can stop a foreclosure before it gets started. You can pay back missed payments, making them part of the plan. You can pay on your mortgage over the life of the repayment plan.

You still have to pay when you file Chapter 13. The problem with filing Chapter 7 in Texas is that you stand to lose the home unless you pay outside the bankruptcy. If you are incapable of making payments, you might as well discharge the debt with a Chapter 7 bankruptcy. If, on the other hand, you can pay on your mortgage – even if you are somewhat behind – the Chapter 13 option is much better.

Let’s go over another federal government bankruptcy tip: “Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan.” How does this help you? You can lower payment amounts by filing this way. The problem with Texas Chapter 7 is, even if you have a lot of unsecured debts like medical and credit card debt, if you make too much money you are ineligible. If you make more than the average income for Texas residents, based on if you are one person or a family of two or more, then you can’t file Chapter 7.

In this situation, you do have the option of filing under Chapter 13. It doesn’t matter how much you make, only that you don’t owe hundreds of thousands. You can even lower interest rates over the course of your repayment plan. If you owe a lot of credit card debt – monies owed you simply cannot afford with your mortgage – Chapter 13 may be better as you can get time to pay on the debts and keep your home from being taken.

It should be noted how foreclosure works in Texas. We are different. If you owe a hospital or credit card company $100,00, they cannot take your home. If you fall behind on your mortgage, technically the lender has the option of foreclosing on your home – if you stop making payments. So a lender can take your home, but a creditor cannot. This is the Texas Homestead exemption, a very unique and useful law which can protect your home.

With a Chapter 13 bankruptcy, you can protect your home by making payments over time and stopping a foreclosure before it begins. Both Chapter 7 and Chapter 13 bankruptcies are useful for certain problems. It’s good to study them, but your best resource on making a decision is a Texas bankruptcy attorney.

The Do’s and Don’ts of Chapter 13 Bankruptcy

November 1, 2010

When filing Chapter 7 bankruptcy, you are mainly discharging unsecured debts. If you want to keep your home and car, you want to pay on these secured debts. When filing Chapter 13 bankruptcy, you have much better protections for your property. By law, all collections against you have to stop for several months (called the automatic stay). Most all debts – other than monies owed such as child support, alimony, taxes, and luxury items recently bought – can be part of your Chapter 13 bankruptcy. But remember: you are paying some if not all your debts. Therefore, the first “do” is quite important.

Do List All Assets You Want to Keep

By law, you have to list all your assets and money in your Chapter 13 bankruptcy filing. This is where a lawyer can be crucial. But in Chapter 13 bankruptcy, the general rule is this: if you want to keep an asset, list it. If you want to keep your home, list it. If you want to keep your car, list it. If you have debts you want to start paying on, list them. In other words, list everything.

Don’t Do This Yourself
If you have some questions – and who doesn’t in their first bankruptcy? – the best answers come from an experienced Texas bankruptcy lawyer. You may read on the subject in books, articles, and blog posts like this one, but that does not equal the value of a lawyer. If mistakes are made, if you do something you should not, you stand to lose far more than the lawyer fee. Chapter 13 bankruptcy is a life changing process. You will be paying for 3-5 years. So when you do hire a lawyer, make sure he or she has experience.

Do File Before Foreclosure
The Texas homestead exemption allows you to protect your home from creditors, but if you fall behind in your mortgage, and wait to file Chapter 13, you may lose the home. If you file early enough, before foreclosure papers are filed, you can save your home. Therefore, get a good lawyer, start the process early, and protect your most valued asset.

Don’t Stop Car Payments
Chapter 13 bankruptcy discharges debts, but not in the same way as Chapter 7. You are paying on these debts. If you have a car, you may want to include it in the bankruptcy. But don’t stop making payments on your car; they can still repossess it in due time if you stop paying.

Do Change Your Habits
What got you into this financial problem? There is no need to dwell on mistakes – and sometimes you made no critical mistakes other than lacking medical coverage or being able to find a new job fast – but you should set some goals for how you will avoid a second bankruptcy. While you can file Chapter 13 bankruptcy more often than Chapter 7, filing multiple times can be difficult.

Don’t Give Up
If you hire a good lawyer, list everything in your filing, set some goals, and are completely honest, you stand to save a lot of time and money. You have to think positive. Think of how you’ll be able to save your home and car, to stop creditor harassment, to get a fresh start.

Chapter 13 Bankruptcy Rules You Must Know

October 6, 2010

There is some scary points when you’re considering filing bankruptcy. For home owners, it can be foreclosure. Some families may fear paying bills if wages are garnished. Some individuals may simply be sick of having impossible debts. While Chapter 13 bankruptcy is not your only solution – Chapter 7 having it’s own advantages – it can be quite effective in protecting your Texas home, your wages, and your rights.

The Automatic Stay Rules
The most important rule to understand in the automatic stay is how long it lasts. Typically, it buys you several months to several years. For Chapter 13 filers, the automatic stay lasts until one of these events occur: your bankruptcy case is closed, your case is dismissed, or when your debt discharge is granted or denied. Since a Chapter 13 filing takes 3-5 years, all collections must stop for this period.

Lawyer or No Lawyer

If you forgo hiring a lawyer, don’t expect an easy process. Simply having no legal experience does not influence how things such as the 341 meeting or court process work; if you have no idea what is happening, you’re out of luck. If mistakes are made, they will affect your case. Hiring a lawyer is crucial for a successful debt discharge.

Documents to Give
The laws can be complex in terms of what documents to file and when to. Your lawyer is best in these situations. You must have proof of your current income and debts, for example, not just going on your word. You will also have to go through the means test.

The Means Test
If you want to file Chapter 7 bankruptcy, you must still submit a means test. If you make too much money, you are ineligible for Chapter 7. In Chapter 13 bankruptcy, you are almost always eligible, unless you owe a high amount in secured and unsecured debts (monies owed in the hundreds of thousands).

Nonexempt Assets
If you have assets which are nonexempt, that means they you are responsible for paying your creditors fair market value. For example, you might own an expensive piece of jewelry. You need not lose it; you can pay the value of the jewelry if it had been liquidated in a Chapter 7 bankruptcy.  This too can get complex, as your trustee is involved and ensuring the monies owed are paid as part of your debt repayment plan. Your lawyer is invaluable in helping you protect nonexempt assets.

Your Credit Rating

Usually a Chapter 13 bankruptcy means you will have a low credit rating. It will definitely affect it for the worse; typically you’ll be at 480. You will have to rebuild your credit. Given time, this is very possible. And if you freed up some funds by buying time to pay back debts, you will have opportunities to improve credit over time. Simply filing bankruptcy does not close all credit and loan options. You just might have to ask a good number of creditors for loans before getting a yes.

6 Success Tips for Avoiding Foreclosure with Bankruptcy

September 10, 2010

Foreclosure is quite often the nightmare scenario. In reality, foreclosure can be avoided in many ways.

You can negotiate with your lender to get a better rate. You can sell the home to save your value in it, via a regular sale or short sale to pay off the debt. However, sometimes your lender will not negotiate a new payment plan. And you may not want to sell your home. You have one more good option: filing bankruptcy. This guide gives 6 success tips on keeping and protecting your home and income.

Get Financial Help
You may need to do far more than just file bankruptcy. Sometimes the problem is with your finances. For example, you may be paying some incredibly high interest rates on credit or medical bills. Some financial counseling may help you understand the advantages and disadvantages for both selling your home and filing bankruptcy.

Hire a Lawyer
The path to success is in hiring an experienced Texas bankruptcy lawyer. You have many options. You can save your home with bankruptcy, but which form? You have a home exemption in bankruptcy, but what are the rules? Texas bankruptcy laws are complex. A lawyer helps you save your home, save money, and protect other assets. The right lawyer with have both experience and a fair price.

Chapter 7 May Not Work
Unfortunately, Chapter 7 is more about saving money than saving homes. You have less legal protection here to stop a foreclosure because you are discharging debt and not paying on it. If your problem is credit card debt, Chapter 7 is smart. If your problem is your mortgage, Chapter 13 may be better. This is again where a lawyer can help.

Chapter 13 Can Help
Chapter 13 bankruptcy will likely be your best option. This is a debt repayment plan where you pay on debts instead of eliminating them. In legal terms you are still discharging debt, but by paying on it. If you file Texas Chapter 13 bankruptcy correctly and with the right lawyer, the judge will put an automatic stay on your money, assets, and home. This stops all collections against you, including foreclosure. If you file before foreclosure papers are filed, you can save your home. This is a crucial step.

Saving Money and Buying Time
On paper Chapter 7 is more about saving money because you are discharging debt. And yes, you can discharge a mortgage n Chapter 7, if you feel paying is impossible.

Chapter 13 can save you money too. If you put a lot of money into the home, that investment disappears in foreclosure. Also, you are buying yourself time to pay on debts, typically 3-5 years.

Filing at the Right Time
Filing bankruptcy at the right time is crucial. Time is never more important than in foreclosure. For success, hire an experienced Texas bankruptcy lawyer, consult with him or her on your options for protecting the home, and then file as soon as possible. Remember, if you wait too long, you may run into some problems, such as being unable to stop the foreclosure.

6 Myths on Chapter 13 Bankruptcy for Texas Residents

August 27, 2010

All too often, we hear one bad review of a movie, book, or show and decide not to go with it. This too happens with bankruptcy.  Bankruptcy law is very complex on paper, but many myths can be dispelled. This blog guide focuses on myths involving Texas Chapter 13 bankruptcy

Myth, You Have to Be Broke
You do not have to be broke at all to file bankruptcy. In fact, you want more money if you file Chapter 13. If you have no money, Chapter 7 is a much better option, and you will likely be eligible unless you make a lot. But in Chapter 13, you need only prove you need legal protection for property and assets. The point is that you are paying on debts; you can have some money or lots of money and still file. You can stop the problem months before it become a financial collapse, at a time when you have more money but know it won’t last.

Myth, You Will Lose Your Home
Chapter 13 bankruptcy puts an automatic stay on all collections and foreclosures. There is some truth here, as you might lose your home. If you cannot pay on the home, or if you wait too long, you may lose it to foreclosure. An automatic stay stops collections for several months, but it cannot stop a foreclosure started before you filed. What it can do is provide you months protection, then give you the opportunity to repay the debt in manageable installments if you file early enough.

Myth, Spending Retirement Savings or 401K is Better

Spending your nest egg is a bad idea. You are only buying yourself a few months to a  years time when you can stop the problem at its source. If you have no money at all, Chapter 7 may better discharge your debts. If you are working and have some income, Chapter 13 makes it so you can afford to make some reasonable payments.

Myth, Your Credit Will be Ruined
Your credit will be hurt, not ruined. You can rebuild it. If everyone in Texas who filed bankruptcy could no longer buy a car, rent an apartment, buy a home, or get a student loan, there would be some big problems. Yes, you may have some high interest rates, you may get turned down a few times. The trick is to continue trying until you get results.

Myth, Creditors Will Stop the Bankruptcy

Your creditors do have rights. They can ask for a lift of an automatic stay. But in Chapter 7, they rarely have much say. In Chapter 13, they are getting the majority of the money owed them, if not all. As long as you stay within Texas bankruptcy law, you will be fine.

Myth, Lawyers Always Overcharge You

Bankruptcy lawyers charge some of the lowest rates in the business. You get charged with a felony, a good lawyer will cost you a lot of money. In bankruptcy, you are filing because you lack proper funds, not because you are rich. Therefore, lawyers charge minimal rates. The good ones may charge more, but when you compare it to the benefits of a successful Chapter 13 filing, such as stopping a foreclosure, it’s more than worth it.

How Much Does a Texas Bankruptcy Lawyer Cost?

June 23, 2010

Finding a lawyer is tough enough, but actually paying a Texas lawyer with experience can sometimes be difficult. You are filing bankruptcy to save money and assets, not spend money and lose assets. Sometimes you may think hiring a lawyer is not feasible. In all cases, it’s more than worth it, and they may charge less and save more than you might think.

What? A bankruptcy lawyer saves you money? Yes, but you need to hire the right one first.

How to Hire a Texas Bankruptcy Lawyer
Looking online may seem risky, but even though many lawyers have no website, it does not mean the ones who do are any less experienced. In fact, you can look directly at this experience online 24/7. Some have blogs like this one, some show their relevant experience, and most will give you a ball park estimate on how much you will have to pay in order to file for bankruptcy.

How much does Texas bankruptcy cost?

Technically, the only differences between a Texas bankruptcy and one from another state is in terms of eligibility, lawyers, and what court you file with. Most of the rest is very similar, as bankruptcy is a federal code, not solely state run.

Let’s get back to the main point. A Chapter 7 bankruptcy will cost you  $299 to file with the court, and the average Texas lawyer will charge you about $1,000-$2,500 for this bankruptcy. There are some big differences in those price ranges – some lawyers go lower still and some even go higher – but it depends on the actual complexity of your case. So if you hired a Texas lawyer for Chapter 7 bankruptcy, it might cost you a total of $1,800 to file. Now, look at the benefits of Chapter 7. You can discharge the majority of your debts, including tens of thousands in medical, credit card, and mortgage debt. If you are considering bankruptcy, you likely cannot afford to pay on all or at least some of these debts. The more you owe, the bigger the benefit. If you can discharge $10,000 for a fraction of that, the benefits are quite obvious.

If you file Texas Chapter 13 bankruptcy, the court fee is $274 with the court, and about the same amount of lawyer fees, ranging from $1,000-$2,500. Now, in this case you are not eliminating your debts; you’re paying on them in an affordable manner over 3-5 years. So it might cost you $2,000 to file Chapter 13 and hire an experienced Texas lawyer, but once you see the benefits the value is clear. If you fear your home is going into foreclosure, a property worth $100,000 with a mortgage you’ve been paying on for years, with Chapter 13 you can stop any foreclosure proceedings before it even reaches court. You can also create a payment plan for other debts, such as credit and medical, over a longer and more affordable period.

So we got some ball park estimates on filing for bankruptcy. While not cheap, think of filing bankruptcy in any form as putting money in the bank, not taking some out. And think of your Texas bankruptcy lawyer not as someone who you write checks, but as someone who can help save your home and save you money.

Filing Dallas Chapter 13 Bankruptcy

June 19, 2010

If you file bankruptcy in Dallas Texas, you would go to the Northern District of Texas. But before you do, there are some things about filing Dallas bankruptcy you should know, especially if you plan on filing for Chapter 13. This post can help.

Eligibility for Texas Chapter 7

You may also be eligible for Chapter 7 bankruptcy. Most all citizens are eligible for Chapter 13, unless you have hundreds of thousands in debt. If you want to file Chapter 7, you must be be below the median income for the state. Here are the numbers.

1 Person – Annual Income Less Than $38,801
Family of 2 – Annual Income of Less than $55,660
Family of 3 – Annual Income of Less Than $59,011
Family of 4 – Annual Income of Less than $66,145
Add $7,500 in most cases per any additional family members.

If you make less than these numbers, you may consider filing Chapter 7. It can be very helpful in cases where you have a lot of debt you simply cannot afford, such as credit, medical, and mortgage debt.

Why Chapter 13?

If you’re a Dallas resident considering personal bankruptcy, you may wonder why you would not choose Chapter 7. Clearly this form can help in ways Chapter 13 cannot. In some cases you are not eligible. In others, you do not want to lose your home. Dallas Chapter 13 puts into motion a plan for keeping all your assets. If you fear foreclosure on your home, Chapter 13 is a far better option in most cases (though you can set up a payment plan for your home with Chapter 7 by working with your trustee). What happens is the moment you file, a judge will put an “automatic stay” on your home, stopping any foreclosure proceedings. If you file early enough, before the papers are filed, you don’t just stall the foreclosure: you can completely stop it.

Also, if your problem isn’t credit or medical debt, Chapter 13 can be easier. It’s a 3-5 year plan where you pay back debts, but these are designed to be affordable. If you have no job and little to no income coming in, Chapter 7 is better. If you have a job and some income, a Chapter 13 debt repayment plan can be very beneficial. It just depends on the kind of debts and assets you have.

How do you file?

You typically hire an attorney first, then file with the court. The fee for filing Chapter 13 bankruptcy is nominal, $274. Lawyer fees cost more, but are designed to be affordable. After all, you’re not filing bankruptcy because you’re rich. Most Texas bankruptcy lawyers charge from $1,000 to $2,500 to handle a case. This comes with many benefits. They can help you fill out documentation, successfully submit to the court, represent you in court, help with your debt repayment plan, stop creditor harassment, give tips on keeping all your assets including your home, and also advise you on how to avoid future bankruptcy.

The First Step

Are you ready to file for Chapter 13 bankruptcy? Unsure if it’s right for you? It takes some time to make the decision. The important thing is to not make it alone. You can consult with an experienced Dallas bankruptcy attorney today to see if Chapter 13 is best for you.

How Much Will Texas Chapter 13 Cost

June 3, 2010

Texas Chapter 13 bankruptcy is very advantageous, but not your only solution. Actually, more file Chapter 7 bankruptcy than Chapter 13, about 3 in 4 filing with the former. However, Chapter 13 bankruptcy has some clear advantages, especially if you make enough money.

1-Most are eligible for Chapter 13, with only hundreds of thousands in debt stopping some from filing.
2-You can save your home from foreclosure.
3-You can keep other assets.
4-You can rework bills so you can afford them.
5-You can avoid wage garnishments.
6-Filing is cheap.

How much does filing really cost? Actual court costs are $299 for Chapter 7 and $274 for Chapter 13. If you file jointly with a spouse, that’s a one time fee to pay the local Texas court.

You should also consider hiring an experienced Texas bankruptcy attorney. Hiring one has many advantages.

1-Save time in filing.
2-Correctly file with court.
3-You can get counsel on whether you should choose Chapter 7 or Chapter 13.
4-An attorney can stop all creditor harassment
5-An attorney can help save your home from foreclosure.
6-And an attorney can save you money by helping to keep other important assets like your car.

How much does it cost to hire an experienced attorney? For Texas bankruptcy, the rates vary depending on the case. Chapter 13 is a longer process than Chapter 7, but once you appear in court, the plan is accepted, and you start paying debt, it’s very simple. An experienced attorney will charge from $1,000-$2,000 in most cases to help you with bankruptcy. If your case is more complex, it may require added time.

Chapter 13 bankruptcy can save you money in many ways. If you have been paying  on a home for years, and you’ve kept it up, all that time and money could mean nothing if foreclosure goes through. It’s the same with other assets, such as your car. If you make too much money, you can’t discharge debts with Chapter 7. But Chapter 13 allows people who make more if not much more money to rework how they pay back debts.

The process takes 3-5 years, but it’s more than worth it. Act now if you fear foreclosure, as by federal law if the foreclosure is begun, you cannot stop it. Hire an experienced  bankruptcy attorney in your area  of Texas today.

What is Texas Joint Bankruptcy?

May 24, 2010

If you’re interested in filing joint bankruptcy, it’s time to call an experienced attorney. Why? Joint bankruptcy is different from traditional bankruptcy, and has different laws. This post, however, is a very good start on learning the basics.

What is Texas joint bankruptcy?
In Texas, the laws are a bit different as it is in each state, namely via consideration of eligibility. Depending on your family size, if you want to file under Chapter 7 you must meet eligibility requirements. If not, you can file Chapter 13. We’ll go over both in this piece.

Here are the current median incomes for Texas.
1 person – $38,801
2 Person Family – $55,660
3 Person Family – $59,011
4 Person Family – $66, 145
If you have a larger family, the rates increase.

What is Chapter 7 joint bankruptcy?
Chapter 7 is a liquidation proceeding where you discharge debts. That means, on paper, you will be eliminating the majority of your debts –such as credit card, mortgage, and medical bills — and getting a fresh start. For joint bankruptcy, filing together can save you some time and money. If you file together, all your joint debts are eliminated. However, if you choose not to file with your spouse, you can. The spouse will still be responsible for his or her debts in this instance.

Filing jointly is a very simple process an experienced Texas bankruptcy attorney can help with. Not only can you save time and eliminate debts, but the filing fee, which is $299, will only occur once (small, but it’s money). You can also save time on paperwork.

If on the other hand you are recently divorced, you may want to go it alone and let the former spouse handle his or her debts separately. This can be problematic if the divorce and financial considerations are not resolved.

If you want to file joint Chapter 13 bankruptcy, you must first meet federal eligibility requirements, which allow most everyone to file unless you have hundreds of thousands in debt (in that case, you definitely need to contact a lawyer for some expert help). Chapter 13 bankruptcy does not discharge debts, but if for example you just lost your job and the spouse is paying the majority of bills, it can be considered to buy you extra time to find more work.

What are the advantages of each bankruptcy?

Advantages of Chapter 7
-Discharge the majority of your debts.
-You have the option to file jointly or individually.

Advantages of Chapter 13

-You can rework your bills so you can afford them.
-You can file together and  stop a home foreclosure.

There are disadvantages to filing bankruptcy in the first place, such as being on your record for up to 10 years. Also, if you or your spouse is fine and needs no bankruptcy, jointly filing will be on the credit report.

In the end, filing Texas joint bankruptcy requires the expertise of an experienced attorney who can go over the details of your case and offer advice.

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