Emotional Neutrality Critical in Personal Bankruptcy

Investors have a term for not letting your emotions get the better of your decision-making: emotional neutrality. In a world where fear can cause a foolish sale and greed can cause a foolish purchase, investors understand how important it is to check your emotions at the door when handling your finances.

 

The benefits of emotional neutrality are equally important in personal bankruptcy. A legal process designed to let you shed yourself of your debts and get a fresh start in life, personal bankruptcy is a critically important tool for people who want to rebuild their finances.

 

The challenge is that bankruptcy is emotional. The hope of financial freedom can produce elation. The fear of failure following your plan confirmation can result in severe apprehension. The tedious and lengthy process can result in boredom and frustration. A successful debtor must play the long game, remaining focused on the end result and not getting distracted by the imperfect means.

 

To maintain emotional neutrality, it’s important to have a skilled, dedicated attorney who can guide you through the bankruptcy process and serve as your emotional ballast, not letting you list too much toward irrational hope and unnecessary fear. The professionals at the Dallas law firm of Fears Nachawati are ready to give you the direction you need. Call us today to schedule you’re free consultation.

Disclose Your Lawsuits

Every year, many Americans unexpectedly suffer a personal injury and must confront large and growing medical bills. They are unable to pay not because they didn’t prepare or spent foolishly; they simply can’t afford the care their injury demands. As a result, they decide to file for personal bankruptcy and the protection of bankruptcy law.

 

In a large number of instances, their decision is the right one. Bankruptcy gives their family and their pocketbook a little breathing space. It also opens important conversations with their creditors, including the health care providers who offered medical services. Lastly, it also let’s them consider whether to move forward with any personal injury claims associated with the party who caused their injury.

 

If this situation sounds familiar, it’s important to remember: you must disclose any active personal injury litigation in your bankruptcy filing. Although it may not feel like your rights have monetary value, that’s exactly how the law – and your creditors – see it. If you’ve sustained an injury because of someone else’s carelessness and you’ve filed a lawsuit in order to prosecute your claims, you must disclose that lawsuit. In the event of a successful tort action, your creditors may have a claim against those proceeds.

 

Don’t run afoul of federal bankruptcy law by failing to disclose pending litigation to which you are a party. It’s a relatively easy misstep to avoid – and an important one. Do you have questions about the relationship between your tort law claims and your bankruptcy filing? The attorneys at the Dallas law firm of Fears Nachawati are prepared to advise you. Talk to us today to schedule your free consultation.

Understand the Texas Exemptions

Texans are fortunate. They live in a state where taxes are low and opportunities are plentiful. What’s more, our laws are forgiving for people who take chances, make mistakes or fall down on their luck. When facing bankruptcy, Texans find that although time may not be on their side, the law related to exempt assets in bankruptcy is.

 

Texas law shields certain types of property from the reach of your unsecured creditors if you decide to declare bankruptcy. As you confront your financial difficulties, it may be important to remember what assets are exempt – and what assets are not.

 

The Texas homestead exemption is one of the most generous in the country. Regardless of its value, a residence located on no more than 10 acres in the city or 100 acres in the country is exempt from the reach of creditors. For that matter, so are the proceeds of the sale of a residence if you file for bankruptcy within six months.

 

The Texas motor vehicle exemption is generous, too. One vehicle per licensed household member, regardless of its value, is exempt under Texas law. In other words, whether it’s a Mercury or a Mercedes, each driver may keep his car.

 

Third, Texas exemption law protects certain pension, retirement and insurance accounts. For older debtors, these exemptions may be particularly important, as your net worth may be high, but your impending health-related expenses may be even higher. If your wealth has been placed in the right asset classes, you may be able to hold on to your retirement nest egg.

 

Finally, Texas exemption law shields a number of items of personal property, $30,000 for an individual or $60,000 per couple, including firearms, family heirlooms, jewelry, pets and clothing. As you think about how to remember your past, continue in the present and rebuild in the future, these items can be of particular sentimental as well as financial value.

 

Want to know more about Texas exemption law and how it may impact your bankruptcy? The dedicated attorneys at Fears Nachawati are prepared to help you get started with your free consultation. Let us inform your decisions and put your mind at ease.

Can I Keep My Mobile Home During Bankruptcy?

Whether you can keep your mobile home during bankruptcy depends on your available legal exemptions; whether it is considered personal property or real estate; and whether you own the land it sits on. States vary widely when dealing with mobile home exemptions. For instance, under federal bankruptcy exemptions, a mobile home is protected as a homestead (up to $150,000) regardless whether it is attached to real estate. On the other hand, states that have opted out of the federal bankruptcy exemptions look to state law for exemption amounts. The amount available to protect equity in personal property is generally much less than the amount available to protect a homestead.

Protecting a debtor’s mobile home during bankruptcy can become an interesting conversation. When a mobile home is purchased a title is issued and it is considered personal property, not real property. However, a mobile home can be “converted” from personal property to real property if it is “affixed” to land, which begs the question: is it better if your mobile home is personal property or real property?

Personal Property
The Bankruptcy Code allows personal property to be “crammed down,” but forbids cramming down a home mortgage in a Chapter 13 bankruptcy. A cram down is reducing the secured debt to equal the value of the secured property. For instance, if your mobile home is worth $30,000, but the loan is $40,000, the bankruptcy court can split the loan into two parts: a $30,000 secured loan and a $10,000 unsecured loan. The unsecured loan gets paid or discharged in the same manner as other unsecured debts, like credit cards and medical bills.

Two federal appellate courts have analyzed the Bankruptcy Code’s prohibition, Reinhardt v. Vanderbilt Mortgage and Finance, Inc., 563 F.3d 558 (6th Cir. 2009) and Ennis v. Green Tree Serv., LLC, 558 F.3d 343 (4th Cir. 2009). Both courts noted that the Bankruptcy Code (section 1322(b)(2)) includes two requirements:
(1) the security interest must be in real property; and (2) the real property must be the debtor’s principal residence. Most mobile home loans specifically identify the property as personal property and not real estate. Consequently, most mobile homes qualify for a cram down of the secured interest. This may save you thousands of dollars.

Real Property
As a general rule, attaching a mobile home to land makes it a permanent part of the property. This may allow you to qualify for additional exemptions, depending upon your state’s laws. Each state has a definition for determining when a mobile home becomes real property. Once the mobile home is converted to real property, the home and the land are considered as a single piece of property. A single homestead (home plus land) has advantages for protecting equity.

Protecting your mobile home may require advanced bankruptcy planning. If you are considering bankruptcy, speak with an experienced bankruptcy attorney early and discuss your options. Your attorney will recommend strategies to protect your property and avoid complications.
 

Why Bankruptcy Timing Matters

To the surprise of many debtors, the Bankruptcy Code is full of provisions that relate to the timing of a personal bankruptcy. For instance, if you file too soon, you might have to divest yourself of certain Christmas or birthday gifts. Some debtors have had the embarrassment of having to ask for a few gifts back – or face civil and criminal allegations of violating the Code’s preferential transfer provisions.

 

Waiting too long can have even more dire consequences. The powerful automatic stay provision of the Bankruptcy Code stops debt collection efforts from virtually all of your creditors. Moreover, the automatic stay can help you keep particular assets, such as your car and home. When you’re working to emerge from bankruptcy later, these assets will be essential to your ability to earn income and your family’s ability to function.

 

By waiting, you don’t get the benefits of the automatic stay. And by not getting the benefits of the automatic stay, you may lose assets that you shouldn’t have to forfeit. Unfortunately, these assets can be hard to recover after they’ve left your possession. In bankruptcy and basketball, it’s easier to play defense with a lead than to rely on your offense to play catch-up.

 

Finally, quick filings can have one more additional impact on timing: the future. The faster you file, the more quickly you can get through the bankruptcy process and beyond the reach of preexisting creditors. You may have your eye on some non-exempt property. Buying before bankruptcy might mean that you’re just buying that vacation home for your credit card company; buying after bankruptcy may mean that you’re buying it for your spouse and your family.

 

Do you have questions about the timing of your bankruptcy? The attorneys at the Dallas law firm of Fears Nachawati are prepared to talk to you about your options and your needs. Talk to our professionals today for your free consultation.

Put the Brakes on Your Car's Repossession

If you’ve fallen behind on your monthly car payments, your lender likely has the legal right to repossess your vehicle. From your lender’s perspective taking action may make sense. If your creditor doesn’t think that you can make timely payments, the value of the car may be the only thing standing between him and a bad debt.

 

From your perspective, of course, losing your car is the last thing you need. If you’re like most Texans, your car isn’t a luxury. It’s a necessity. To get to work in the morning, go home at night, or to buy groceries on the weekend, you must have your car. Losing access to your car – even temporarily – may cost you thousands of dollars in lost time, lost wages, and lost opportunity.

 

To tap the brakes on your car’s repossession, exercising your state rights and remedies may be required. To repossess your car, your creditor must have an attached, enforceable security interest in your car. If the creditor has fallen short in executing the necessary steps for an attached, enforceable security interest, you may be able to keep your car. Additionally, your creditor cannot breach the peace in the act of repossession. So, there may be practical limits on his repossession efforts, too.

 

To slam the brakes on your car’s repossession, filing for personal bankruptcy may be necessary. The Bankruptcy Code’s automatic stay and other powerful provisions may give you the ability to retain your car. By filing a Chapter 13 plan, you may be able to restructure your note, reducing the size of your monthly payments, and moving toward a more acceptable debt structure.

 

Need to find out more information about how to manage your creditors expectations and, if necessary, protect your legal rights and interests? The attorneys at the law firm of Fears Nachawati are prepared to help you do just that. With years of experience, we’re prepared to give you the advice you need to navigate the challenges you face.

 

Debt Consolidation or Personal Bankruptcy?

If you’re facing the financial effects of unemployment, an illness, divorce, or mismanagement, you may be considering a serious, life-altering financial decision, such as debt consolidation, Chapter 7, or Chapter 13 bankruptcy. Before you make any decisions, you may want to consider speaking to a dedicated professional at Fears Nachawati.

 

Debt consolidation may be the right decision in some circumstances. In effect, a debtor will take out a large loan in order to pay down or pay off several other smaller loans. When does this strategy make sense? If you can trade high-interest, short-term loan, such as credit card debt, for a long-term, lower-interest loan, you may pay less in monthly payments for the same amount of debt.

 

Of course, debt consolidation may just treat the symptoms, not the problem, and leave debtors worse off than before. For instance, if overspending is causing you to experience monthly shortfalls, debt consolidation may just delay the inevitable. Moreover, if you trade unsecured debt for secured debt, then your ultimate personal bankruptcy could be worth a lot less as you lose the ability to take advantage of valuable exemption.

 

Personal bankruptcy isn’t much fun – and it isn’t the right decision for everyone – but it is a solution for some debtors. If you’re considering debt consolidation, you may also want to talk to our professionals so that you can learn about all of your options and the comparative advantages of each strategy. Talk to us today for your free consultation.

Do You Have Questions about Your Bankruptcy?

In many situations in life and in the law, knowing the questions can be more important than knowing the answers. When considering bankruptcy or going through the process, questions can keep you focused on your next steps and on sticking with your plan.

 

Don’t be afraid to ask your bankruptcy-related questions to a qualified professional or dedicated attorney at Fears Nachawati. Want to know whether your spouse has to file bankruptcy along with you? (A: Not necessarily.) Interested in finding out whether you can discharge your parking tickets, traffic citations, or property taxes in bankruptcy? (A: Nope.) Worried that you won’t be able to access credit after your bankruptcy? (A: You might be surprised.) For all of these questions and more, the attorneys at Fears Nachawati can give you the help you need.

 

Chapter 7 and Chapter 13 are confusing, even for many lawyers. What kind of debt you hold, who holds it, and what it was used to purchase are all features of your bankruptcy that can have profound – and unintuitive – effects upon your personal finances. Doing-it-yourself is a risky strategy that will likely result in you missing out on good opportunities and may even put your bankruptcy discharge at risk.

 

Ready to talk to professionals who know the answers to your questions and are prepared to guide you through the process of declaring personal bankruptcy? Our team is ready to fight for you. To learn how we can help, contact us today.

Pre-Bankruptcy Planning & Post-Bankruptcy Success

To enjoy the fruits of personal bankruptcy, you should consider carefully understanding your present financial condition as well as your hopes for life after bankruptcy. Although your bankruptcy attorney can help you effectuate a legal solution to your financial problems, only a well-considered plan will keep you from facing insolvency in the future.

 

Debtors should be aware that there’s really only one shot in the bankruptcy gun; you don’t want to miss. The Bankruptcy Code provides that consumer debtors may receive a discharge of their personal debts only once in a seven-year period. In this way, creditors are protected from debtors receiving multiple, frequent discharges. Debtors, therefore, must take care to make sure that all appropriate debts are discharged – and that they are prepared for living for an extended period with the benefit of bankruptcy.

 

How should you prepare for such a length period without the availability of bankruptcy? Talking to a trained, experienced, and devoted bankruptcy attorney is a good initial step. As you prepare for these next steps, it’s important to understand what property is exempt from your creditors’ reach, what transfers the law prohibits you from making, and what it takes to live within your means for a multi-year stretch.

 

Post-bankruptcy success is available to you, but for many debtors, it takes sound pre-bankruptcy planning. To know decisions you should make, when you should make them, and what legal and financial issues you should consider, talk to the bankruptcy professionals at Fears Nachawati today. With years of experience and dedicated expertise, we know how to answer your questions, protect your legal interests, and increase the likelihood of your success. For your free consultation, talk to us today.

Successful at Coaching, Unlucky in Business

University of Arkansas head football coach John L. Smith filed for bankruptcy earlier this month, revealing he had acquired $25.7 million in debt during the last several years. Smith’s bankruptcy has made national headlines because of the amount of his personal debt and the prominence of the debtor. However, the reality is that in a number of important ways, Smith’s bankruptcy is very much a run-of-the-mill Chapter 7 liquidation.

 

According to Smith’s bankruptcy filings, Smith accumulated a considerable amount of unsecured debt, particularly in relationship with the amount of money he earned as a football coach. While Smith’s contract with the University of Arkansas – $850,000 over 10 months – clearly makes him a high-income earner, even this salary isn’t enough to feasibly support his level of debt.

 

How could a debtor with millions in unsecured debt reflect many Chapter 7 debtors? First, Smith’s debt originated primarily from a series of Kentucky-based real estate transactions that were premised on the assumption that the land would increase in value. When property values tanked, equity holders like Smith became obligated for the debt.

 

Second, Smith isn’t a professional failure. The opposite is true, in fact. Smith’s success at the University of Louisville earned him the position of head coach at one of the most storied and prominent football schools in nation’s premier college football conference. As Smith himself admitted recently, his skills on the gridiron didn’t translate to business.

 

The painful truth for many debtors and their families is that bankruptcy court dockets in Arkansas, Texas, and throughout the country are filled with Chapter 7 debtors who are talented, intelligent, experienced, and successful professionals. They just made commercial and financial mistakes. And frequently, those mistakes took the form of real estate that looked promising, but ultimately plummeted in value.

 

Ready to talk to the attorneys at Fears Nachawati who can help you chart a course through the choppy waters of personal bankruptcy? With years of experience and dedicated expertise, we know how to protect you and your family from hard-nosed creditors. Start your journey toward solvency today by contacting our professionals.

Your Options for Relief from Debt

You may have heard the expression, “There’s no one way to skin a cat.” For most Americans struggling to make ends meet, that expression is true for debt relief, too.

 

For most debtors, the truth is that you’ve got options. To ease the stress on your family’s balance sheet, credit counseling might be all that you need. Alternatively, depending on the amount of debt you owe and the willingness of your lender, you may be able to negotiate a debt settlement. In a debt settlement, you may wind up making a large one-time payment and, in exchange, receive debt forgiveness for the remainder of your indebtedness. Finally, you can take the nuclear option: declaring bankruptcy.

 

Personal bankruptcy has drawbacks. It can severely damage your credit score for a prolonged period of time and reduce your access to future credit. On the other hand, it’s not all bad news. Bankruptcy can also relieve you of potentially all of your unsecured debt. Moreover, while you’re in bankruptcy, the automatic stay will protect you from annoying phone calls, letters, and emails from your creditors.

 

Which course of action is right for you and your family? The attorneys at the Dallas law firm of Fears Nachawati are prepared to help you sort through these tough decisions. Thanks to our experience, we’re able to help debtors determine the right course of action for their families. Contact our professionals today to get started on your road to financial freedom. We’re ready to help.

The Chapter 11 Plan of Reorganization

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.