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

A chapter 13 bankruptcy is also called a “reorganization plan” or a “wage earner's plan.” A debtor who files a chapter 13 bankruptcy intends to repay all or part of her debts in installments to creditors over three to five years. The individual’s repayment plan term cannot exceed five years.

There are a number of advantages that chapter 13 affords to debtors. The most significant is the ability to stop a home foreclosure and force the creditor to accept payments for any delinquent mortgage payments. The bankruptcy automatic stay stops foreclosure proceedings immediately upon the debtor’s bankruptcy filing with the court. However, this temporary relief may be lost if the debtor fails to make the regular mortgage payments that come due after the chapter 13 filing.

Another advantage of chapter 13 bankruptcy is that a debtor may modify a secured loan and repay it over the plan term. This usually lowers the monthly payment. In certain circumstances the debtor can also “cram-down” the secured loan by stripping away the unsecured portion of a debt. For example, a debtor may owe $20,000 on a car that is only worth $10,000. Chapter 13 may allow the debtor to modify this loan and only pay the creditor the value of the car, or $10,000. There are special qualifying rules for this type of modification, so be sure to discuss your situation with your attorney.

Within 15 days of the filing of the chapter 13 bankruptcy petition, the debtor must file a proposed repayment plan with the court. The plan is also sent to the U.S. trustee and all creditors for review and opportunity to object. The plan must provide for regular fixed payments to the trustee who then distributes the funds to creditors according to the terms of the plan (which may be less than full payment on their claims). It is common for a chapter 13 plan to propose to pay secured creditors in full and nothing to unsecured creditors. This largely depends on whether there is “extra” money at the end of the month after the debtor’s secured creditors and monthly expenses are paid.

Occasionally circumstances change after confirmation of the chapter 13 plan that prevents the debtor from completing the repayment plan. The debtor may ask the court to allow the debtor to modify the plan, or to grant a “hardship discharge” and end the case early. Otherwise, at the end of the three to five year repayment period the court will discharge the debtor’s remaining debts that are not “non-dischargeable” by law. The chapter 13 bankruptcy discharge prevents those creditors from seeking payment from the debtor.   

If you are over-burdened with secured debts and are in need of relief, consult with an experienced bankruptcy attorney about your rights under chapter 13 of the bankruptcy code.

When you are experiencing a financial crisis you may feel like you are the only one in that situation. The reality is that many people are feeling the current financial crunch for one reason or another. So whether you live in Dallas or any other part of the country, you are not alone!

The following top five reasons seem to be the most common reasons why many people are filing for bankruptcy:

1. Wiping the slate clean. The goal of a discharge is to reduce debt to give you a fresh start.

2. Stop foreclosure or sale of your home.  If your home is in foreclosure a Chapter 13 bankruptcy will stop the foreclosure any time prior to the sale.

3. Prevent repossession of your car or other property. If the bankruptcy is filed quickly enough it can effectively force the creditor to return your car or other personal property.

4. Stop aggressive collection efforts by creditors. Often, creditors will call the home of a debtor at all hours and behave in an abusive manner. Bankruptcy will help stop the harassing phone calls and other aggressive behavior by creditors.

5. Restore or prevent your utilities from being shut off. Filing bankruptcy can prevent the utility company from pulling the plug on you.

If you are experiencing a financial crisis, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for a free bankruptcy consultation.

Currently mortgage modification is a very hot topic. It is being seen as an alternative to foreclosure or bankruptcy. Briefly, a loan modification is a process by which the bank modifies the terms of a borrower’s mortgage to lower the monthly payment. The bank can change a person’s interest rate, reduce the principal balance of the overall amount owed and extend the amount of time a person has to pay off the loan (up to 40-50 years). These are some of the ways in which the lender reduces a borrower’s monthly payment to an amount in which they can afford as opposed to foreclosing. Sounds simple enough but as many people find out, dealing with a mortgage servicer takes much time and patience. Most of the time, you will have a hard time reaching them or they will not return your call.

Without legal representation you are basically at the mercy of the mortgage holder. If you are having trouble with your mortgage, an attorney skilled in loan modifications can help:

• Lower your interest rate to a payment you can afford
• Stop foreclosure
• Obtain a principal forbearance
• Change the terms of an option ARM mortgage

If you are a resident of Fort Worth, Dallas, Arlington, Garland, Rowlett, Mesquite and Plano contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for more information on home loan modifications.

The automatic stay is the bankruptcy law’s most powerful provision and immediately stops nearly all creditor actions against a debtor.  The automatic stay is invoked upon filing the case – no hearing is necessary and no judge’s signature is required.  This powerful injunction is even effective against creditors that have no actual knowledge of the bankruptcy!

Congress has stated that the policy behind the automatic stay is to give the “debtor a breathing spell from his creditors, stopping all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.”  See Notes of Committee on the Judiciary, Senate Report No. 95-989.  That “breathing spell” is a welcome relief to families with overwhelming financial burdens.

The automatic stay prohibits a creditor with a claim that arose before commencement of the bankruptcy case from taking many actions, including:

• contacting the debtor to request payment (stops collection calls)
• initiating or continuing a lawsuit against the debtor (stops lawsuits)
• enforcing a judgment against the debtor (stops wage garnishments)
• repossessing personal property or foreclosing on real estate (stops repossessions and foreclosure)

The automatic stay is a temporary injunction which can be contested by a creditor and lifted by the bankruptcy court after notice and a hearing.  There are a few exceptions to the automatic stay, for instance: the automatic stay does not prevent criminal prosecutions.  Likewise the automatic stay does not stop lawsuits to establish or modify alimony, maintenance, or support.

Individuals that file for bankruptcy receive this powerful legal injunction against creditor actions.  However, the automatic stay is just one weapon in your bankruptcy attorney’s arsenal.  Your bankruptcy attorney can use the power of the bankruptcy laws to help you make the best decisions for your family’s future financial health and recovery.

Contact bankruptcy law firm Fears | Nachawati today for a free consultation to learn more about automatic stay and your rights.  Call us toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com.