Should I file for Bankruptcy?
There are several bankruptcy options that might help improve your financial well-being and give you a fresh start. A free consultation is offered to determine the solution that is right for your unique financial situation.
What does it mean to be Board Certified?
The Texas Board of Legal Specialization (TBLS) was established in 1974 and certifies attorneys in 21 select areas of law. The TBLS advances quality standards within the legal profession by certifying attorneys with demonstrated experience and knowledge within a certain area of law.
Learn more about the Texas Board of Legal Specialization
How will filing affect my credit?
If you’re already receiving phone calls or letters from collection agencies, or if you have charge offs, payday loans, car repossessions, or foreclosures on your credit—your credit history has already been affected. A Bankruptcy eliminates debt and clears the path for rebuilding with a fresh start.
Is a Chapter 7 or Chapter 13 my best option?
Usually, Chapter 7 bankruptcy clears your debts within about 4 months, but if you’re delinquent on your car or house, or owe the IRS, a Chapter 13 bankruptcy might be the best option for you. But, since everyone’s financial circumstances are different, we will meet with you for no charge to review your situation to determine the best solution for you.
Why should I file a Chapter 13 and not a Chapter 7 bankruptcy?
- Because you wish to repay all or most of the debts and you have the income to do so;
- You have non exempt property that you wish to keep that would be lost in a Chapter 7;
- You are not eligible for a Chapter 7.
- You have debts that are dischargeable under a Chapter 13, but not under a Chapter 7;
- You are behind on your home payments, and need the court to force the bank to accept payments on the arrearage.
What is a Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is also referred to as straight bankruptcy. All dischargeable debts are eliminated, and the debtor receives a fresh start; the process typically takes less than 4 months.
Learn more about Chapter 7 bankruptcy
What are the most common reasons people file for Chapter 7?
- Large medical bills
- Unemployment or disability
- Seriously overextended credit
- Marital problems
- Other large unexpected expenses
What is a Chapter 13 Bankruptcy?
Chapter 13 is for people who have a regular income, but need to have their debts reorganized so they can make payments on terms favorable to them, not the creditors.
Learn more about Chapter 13 bankruptcy
What is a Chapter 13 plan?
This is the agreement with the court stating what your obligations are and how much you must pay each month. It is a several page document that we prepare for you as part of the bankruptcy filing.
Must all debts be paid in full in a Chapter 13?
No. Unsecured debts are usually paid only a percentage of what is owed. And they can not add interest while the plan runs. Secured debts must be paid 100%. Typical secured debts are your house and automobile.
Will my spouse need to file bankruptcy with me?
Not usually. A married person may file as an individual, and the filing does not affect the credit of the other spouse. In some areas, however, the courts require that the spouse file.
Can my employer legally fire me for filing?
No. This is now illegal.
Can I go to jail if I do not pay my debts (and do not file bankruptcy)?
No.
Can I keep my credit cards?
No. Lenders will close all your accounts, even accounts that haven’t fallen behind. You’ll keep your bank card and when the bankruptcy is over, you can apply for a credit card or secured credit card to begin rebuilding your credit. If you need to incur the debt of a vehicle, the court will typically allow that kind of purchase as long as you can prove you can afford your payments.
What is a secured debt?
A secured debt is one where the creditor has a lien on the property you purchased from them or some other property you own. This is a form of collateral. The most common item used for security in a secured loan is an automobile.
What is an unsecured debt?
An unsecured debt is where the creditor only has your promise that the loan will be repaid. It does not involve collateral. Some examples of unsecured debts are credit cards, department store cards, medical, and utility bills.
Will I receive a 1099 for the amount of the debts discharged?
No. This is one of the big advantages of bankruptcy over a debt consolidation.
Can I run up my credit cards before I file?
No. This is a crime! Because it’s fraud, it’s illegal and we advise strongly against it. In fact, if the creditors can prove you did this, you could lose your right to file bankruptcy.
Should I file on my utility bills?
Because utility bills are ongoing debts, if you still have service with the company, you will be responsible for maintaining your balance or risk termination of service. However, if you switched utility companies and have collection accounts, you may be able to include them in your bankruptcy.
Can I give away property before I file?
No. You can give gifts if they are under $600. If the amount is more than $600, the trustee may recover the property or you could lose your right to file bankruptcy.
Can I pay back family members before I file?
It’s not recommended. If you’ve already started making payments, we will review the amount of the payments and how long you’ve been making them and then the court will decide what to do.
What is the Means Test?
The Means Test is an income qualification tool used to determine if you are allowed to file a Chapter 7 bankruptcy or if you must file a Chapter 13 bankruptcy. Individuals with more than a certain income must file Chapter 13.
I lost my driver’s license for not paying a judgment; will bankruptcy get it back for me?
Yes. This is probably one of the biggest advantages of bankruptcy over any other form of financial assistance the Keeling Law Firm provides.
I filed for bankruptcy before. Can I file again?
Yes, you can file a Chapter 7 bankruptcy eight (8) years after your last Chapter 7 filing. However, the time periods differ if your last filing was a Chapter 13 bankruptcy.
Will a credit counselor get me a better credit rating than if I file Bankruptcy?
No. A Bankruptcy will cost you less money; you’ll also be able to rebuild your credit much faster. There are as many good credit counseling companies as there are bad ones, and some are just pain rip-off artists. Don’t take the chance; hire a bankruptcy attorney.
What debts are not erased by a bankruptcy?
- Debts for personal injury or death caused by your drunk driving
- Student loans, unless the court finds that the debt would impose an undue hardship on the debtor and his or her dependents
- Most tax debts
- Child support and alimony
- Debts pursuant to a divorce judgment and your spouse objects
- Debts for obtaining money by fraud, false pretenses, or theft
- Debts for some fines and penalties in criminal cases
- A few other very narrow exceptions
Can I keep my tax refunds?
Generally, yes. The refund will need to be exempted.
If I am surrendering my home, how long can I stay in it?
It depends on a number of things. We’ll need to review your situation and will help you determine the date you’ll need to vacate the home.
What happens when the case is filed?
The court immediately invokes an automatic stay when you file. The court order prohibits creditors from calling, sending you letters, or contacting you in any way. They can not attempt to collect money from you by any means.
What if I have been sued and have judgments against me? Can I still discharge the debt?
Yes, you can still discharge the debt. The fact that you’ve been sued or have a judgment doesn’t stop the bankruptcy from discharging the debt.
After my bankruptcy is filed and complete, what if I want to repay some of the discharged debts?
When the case is closed, you are free to pay whomever you like. But remember, after a bankruptcy, paying a discharged debt is a gift to the creditor.
Will creditors appear at my meeting with the trustee (also called the 341 meeting)?
It’s not likely. Creditors are allowed to appear to observe the testimony, but interrogation is not allowed. The Creditors meeting is not a trial or a hearing, but simply a review and verifications of the facts of your unique situation.
How much will my plan payment be?
In most cases, all extra income above your family’s basic necessities will be paid into the plan. Determining what your basic necessities are is one area in which having a good attorney can benefit you.
If I am self-employed, can I file a Chapter 13 bankruptcy?
Yes. Eligibility requirements are the same for the self-employed as everyone else.
If I can not make the plan payments, can I convert to a Chapter 7?
Possibly, if there has been an unforeseen change in your circumstances. You can’t change the amount if you don’t like it, but you can always drop out of the plan and dismiss the bankruptcy.
Can I keep my tax refunds in a Chapter 13 Plan?
No. In a Chapter 13 bankruptcy, your refunds must be paid to the trustee.
Yes. In most cases we can protect your tax refund from being taken by the Chapter 13 Trustee. However, if you owe the Internal Revenue Service, it’s possible that they will take your refund and apply towards the balance owed.
Do I lose any legal rights by filing a Chapter 13?
No. A bankruptcy is not a criminal proceeding. You do not lose any rights to drive, vote, carry firearms, hunt, or obtain business licensing.
Is having my wages garnished by the Trustee my only option?
Yes, in most cases. Unfortunately, this of course lets your employer know that you have filed a Chapter 13 bankruptcy. A Trustee will not accept payments directly from you because the Bankruptcy code mandates that if you are a wage earner, you must submit to a wage garnishment. If you’re self-employed, the court will require your Trustee payments to be deducted from your checking account.
What if a creditor doesn’t file a claim?
They do not get paid. At the completion of the plan, the debt you owe them is discharged in full. Should you notice that a secured creditor has not filed a proof of claim you should contact us immediately so that we can take the steps to protect your rights upon discharge.
If my income changes, can the plan payment be changed?
If your income changes because you lose your job, yes. If you quit your job voluntarily, a change in payment amount may not be allowed.
A Chapter 13 Plan payment is calculated based on what must be paid in five years. The code doesn’t allow a repayment plan to exceed five years. If you are unemployed and get behind on your Trustee payments, but later obtain employment and simply can’t get caught up, call us and let us help you find a solution.
Can I add creditors where I incurred new debt during the plan?
No. There are a couple of very narrow exceptions, but do not expect to be able to.
Can I keep my vehicle?
Your vehicle is considered a necessity, so the court grants a generous exemption. Nearly everyone who files bankruptcy gets to keep their vehicle. You do need to continue making payments on your vehicle. This is one of the things we can discuss in your free consultation.
Can I keep my home?
Generally, yes—but one thing bankruptcy can never do is allow you to keep the home and not pay for it.
What circumstances must exist for me to not be able to keep my home?
The primary reason courts approve someone not keeping their home is when the home is considered to be more luxury than shelter. In other words, if the monthly payment for your house takes up the majority of your household income, you might have to surrender the house.
What is an exemption? And what property is exempt?
Exempted property can’t be taken by creditors or the Trustee. An exemption is the amount of value in a given item of property that the court determines that a person filing bankruptcy is allowed to keep. Property which is in excess of the allowable exemptions must be turned over to the trustee.
Can I keep my 401k, pension plan, profit sharing plan, etc.?
Usually, yes. “ERISA-qualified plans” are excluded. There is no limit on the amount you have in these plans.
Will someone come to my home and take my property or look to see what I own?
Not unless the court has reason to believe you have lied about the value of your property.
Do I have to disclose all of my assets?
Yes. All debts and assets must be disclosed by law and noted in your petition.
What about my boat, motorcycle, and ATV?
These items are usually considered luxury goods, and there is no specific exemption for them. However, you might be able to keep them if their value fits into one of the other exemptions.
How long after filing will the creditors stop calling?
After your bankruptcy petition is filed, the court mails a notice to all your creditors. Typically it takes a couple of weeks for the contact to stop. You can also get creditors to stop calling if you tell them you have filed bankruptcy and provide them with your case number. If a creditor continues attempting to collect from you once they’ve been informed of your bankruptcy, they could be liable for court sanctions and attorney’s fees.
Can I file on back child support and alimony obligations and discharge them?
No. this is one of the few protected areas.
Should I file on debts where I am a co-signor? What effect does this have on the other parties to the loan?
Yes, you should file on those debts as well; doing so will have no effect on the other parties. Also, if they default at some point in the future, the creditor can’t try to collect from you.
What if someone co-signed on a loan with me, will they have to pay the debt if I file bankruptcy?
Yes. If you file bankruptcy, the other party will then be stuck paying your debt.
Can I discharge student loans?
There are two exceptions:
- The student loan may be discharged if it is neither “insured or guaranteed by a governmental unit” nor “made under any program funded in whole or in part by a governmental unit or nonprofit institution.”
- The loan may be discharged if it imposes an undue hardship on the debtor or the debtor’s dependents. It is not easy to prove that a hardship case exists and it takes a special hearing to do so.
How long will my bankruptcy be reported on my credit report?
It will appear on your credit report for up to 10 years.