Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Occasionally an individual or couple cannot qualify for a Chapter 13 repayment bankruptcy and must file under Chapter 13. The procedure for proposing a Chapter 11 plan of reorganization is dictated by the Bankruptcy Code and is in many ways similar to a Chapter 13 bankruptcy. The Chapter 11 bankruptcy debtor may file a plan of reorganization during the first 120-day period after the case is filed, and the debtor has 180 days after the entry of the order for relief to obtain creditor acceptance of its plan. After that period a creditor may file a proposed plan with the court. A bankruptcy trustee, if one is appointed, will also file its own plan, or a recommendation for conversion or dismissal of the case.

The Bankruptcy Code lists mandatory and discretionary provisions of a Chapter 11 plan, including the designation of classes of claims and interests. Generally, a plan will classify claim holders as secured creditors, unsecured creditors entitled to priority, general unsecured creditors, and equity security holders. These classes will vote on the acceptance or rejection of the proposed plan(s).

Before confirmation of a plan of reorganization can be granted, the court must be satisfied that the plan is in compliance with all the requirements for confirmation stated in the Bankruptcy Code. In order to confirm the plan, the court must find, among other things, that: (1) the plan is feasible; (2) it is proposed in good faith; and (3) the plan is in compliance with the Bankruptcy Code. In order to satisfy the feasibility requirement, the court must find that confirmation of the plan is not likely to be followed by liquidation or the need for further financial reorganization.

A Chapter 11 bankruptcy case is a complex legal proceeding requiring the leadership of a skilled and experienced bankruptcy attorney. An experienced bankruptcy attorney can guide you through the Chapter 11 process, and help you reach the best possible financial outcome.

After filing a bankruptcy case, some debtors experience “cold feet.”  Some have difficulty facing the trustee at the 341 meeting.  Others cannot meet their Chapter 13 plan payment obligations.  Still others are tempted by the promises of a non-bankruptcy resolution, like debt consolidation.  Before you back out of your bankruptcy case, make sure that your decision will be in your best interest.

Once you abandon your bankruptcy case, the federal legal protections that prevent your creditors from collecting will expire.  Your bankruptcy case prohibits creditors from filing lawsuits, garnishing wages, and calling or otherwise harassing you over your debt.  The minute your case is dismissed you become fair game to your creditors.

Failing to complete your bankruptcy case means you will not receive the benefits of a bankruptcy discharge.  Once your bankruptcy case is completed, the court issues a bankruptcy discharge which acts as a legal injunction forever prohibiting creditors from collecting from you personally.  This protection is extremely powerful and never expires.  On the other hand, when your case is dismissed, the creditor may charge you with interest and/or penalties that you did not anticipate.

If you dismiss your case and later re-file, you will have two bankruptcy cases on your credit file.  Dismissing a bankruptcy case does not erase the first case from your record and does not lessen its impact on your credit score.

If circumstances change after you file your bankruptcy case, discuss the matter with your attorney.  Most problems can be resolved without dismissing the case.  For instance, a Chapter 13 debtor who suffers a loss of income may be able to convert the case to a Chapter 7 and receive a discharge without further repayment.  In another example, if a Chapter 7 debtor incurs unexpected medical debt, the debtor can convert the case to Chapter 13 and include the new, post-petition medical bills in the Chapter 13 case. 

The general rule in bankruptcy is, “Once filed, follow through.”  However, every case is different and presents its own challenges.  Speak with your attorney and discuss your legal options.  You and your attorney can formulate a plan that will benefit you and your family.

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Garnishing a debtor’s wages is one of the most common and effective means a creditor has to get paid.  A garnishment is a typically a court order (in some rare cases a garnishment can come from another source), and directs the debtor’s employer to withhold a certain amount or percentage from the employee’s pay.  This amount may be limited by state or federal laws, depending on the type of debt and the income source, and the debtor may be able to assert certain “exemptions” that restricts the amount of the garnishment each pay period.  The garnishment usually comes unannounced and is delivered just before the debtor’s payday, to ensure that the creditor receives the maximum amount from the garnishment.

Certain income sources receive increased protection from garnishment like Social Security, retirement plan benefits, public assistance, workers' compensation, and unemployment or disability benefits.  However, certain debts like child support can collect from most of these income sources.

When a garnishment is taking more than you can afford to pay, it may be time to consider filing bankruptcy.  The federal bankruptcy laws will stop debt collection including garnishments.  The moment the bankruptcy case is filed a temporary injunction known as the “automatic stay” stops all creditor actions immediately and automatically – even if the creditor has no knowledge of the bankruptcy filing!  This stay continues throughout your bankruptcy case unless terminated or modified by the bankruptcy court.  For most garnishments, the debt will be discharged at the end of the bankruptcy case and the creditor can no longer collect from you.

Once you have filed your bankruptcy and the garnishment has stopped, it may be possible to have wages that were withheld from your check returned to you, provided your employer has not already sent the funds on to the court or to the creditor.  Ask your attorney whether you can have funds returned once you file your case.

If you have a wage garnishment, consider your options by consulting with an experienced bankruptcy attorney.  Your attorney can explain how the federal bankruptcy laws can stop your wage garnishment and put your wages back into your pocket.

Fears & Nachawati Law Offices

4925 Greenville Ave Suite 715, Office 1, Dallas, TX 75206 (214) 890-0711  Google Reviews ‎  |  fnlawfirm.com  |  Directions

The traditional wisdom for debtors in bankruptcy was to protect your home and discharge unsecured debts.  In some cases, bankruptcy attorneys advised surrendering a vehicle and eliminating the monthly auto payment in order to afford the home mortgage.  Back when real estate prices were appreciating at staggering rates, that wisdom was sound advice.  It was important to protect an asset that was appreciating quickly and could be used to secure a family’s financial future.

Unfortunately, times have changed.

Over the past few years housing prices have flattened, or even depreciated.  In many areas home prices have dropped significantly.  For a debtor who is upside-down on a home loan, it usually doesn’t make sense to try to dig out of negative equity and continue to pay on a home that is a liability, not an asset.

If your mortgage is stressing your family’s budget, it may be wise to walk away.  It is important to consider surrendering your home during bankruptcy and renting rather than continuing to pay a burdensome mortgage payment, taxes, insurance, home repairs, and maintenance.  The question to answer is whether walking away will save you money in the short run and the long run.

One tool for this analysis is provided free of charge at Trulia.com.  Trulia maintains a rent vs. buy calculator that compares the cost of buying a home against the costs of renting.  Using the calculator you can determine whether keeping your home is a smart financial decision.  Trulia also publishes a Rent vs. Buy Index, which tracks whether buying a home or renting is less expensive in America's 50 largest cities, based on current market conditions.

Deciding whether to walk away from a home is often difficult, but is an important consideration for any home owner facing bankruptcy.  When a debtor surrenders property in bankruptcy there is generally no financial consequence to the debtor, and the debt is discharged by the bankruptcy court.  If you are considering surrendering your home during bankruptcy, speak with an experienced attorney and discuss the advantages and disadvantages of the process.  Your bankruptcy attorney can help you reach a decision that is right for you and your family.

Fears & Nachawati Law Offices

4925 Greenville Ave Suite 715, Office 1, Dallas, TX 75206 (214) 890-0711  Google Reviews ‎  |  fnlawfirm.com  |  Directions

Pop quiz: What do Walt Disney, Mark Twain and Larry King have in common? 

1. They each filed a personal bankruptcy and went on to have extraordinary success in life.

Bankruptcy is not a professional or financial death sentence.  Just ask Donald Trump who has filed multiple Chapter 11 reorganization bankruptcies for his casinos.  Bankruptcy is a financial tool that uses the federal law to protect the honest, but unfortunate debtor.  Bankruptcy allows the debtor the opportunity to restructure finances and formulate a plan to repay or discharge debt.  Bankruptcy provides the debtor a fresh start to a new financial future – one free of the pressures from debt collectors. Free Consultation 

Here’s another question: What honor did Kim Basinger and Burt Reynolds receive after filing personal bankruptcy? 

1. Each was nominated for an Academy Award in 1997.  Basinger won an Oscar for best supporting actress for L.A. Confidential, and Reynolds was nominated for best supporting actor for Boogie Nights.

Bankruptcy can help you and your family build a more solid financial foundation.  Henry Ford created another automobile company after his first company filed bankruptcy.  It’s safe to say that Ford Motor Company would not exist today without the help of the federal bankruptcy laws.  The same can be said for General Motors, which filed for Chapter 11 bankruptcy in 2009. Free Consultation 

How can bankruptcy help you?  The bankruptcy laws can stop a foreclosure sale, a pending lawsuit, and creditor harassment.  Bankruptcy can protect your family assets and retirement accounts from creditors.  Bankruptcy can eliminate debt or give you time to repay loans including delinquent car and home payments.  The federal bankruptcy laws helped over a million people get relief during 2009, including celebrities Stephen Baldwin, Sinbad, and Bernie Kosar. Free Consultation 

As Abraham Lincoln (filed bankruptcy in 1833) once said, “The best thing about the future is that it comes only one day at a time.”  If you are experiencing overwhelming financial difficulty, take the first step to a better future by speaking with an experienced bankruptcy attorney today.