Tag Archives: bankruptcy attorney

TEXAS BANKRUPTCY: DEBTORS PROTECTED AGAINST DISCRIMINATION

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Can my employer fire me for filing bankruptcy?

 

The Bankruptcy Code expressly prohibits private employers from firing you because you filed for bankruptcy.  See 11 U.S.C. § 525(b).  This prohibition even protects debtors who discharged debts owed to their employer.  For example, a bank teller cannot be fired for discharging credit card debt owed to the bank in which they work.

 

Can my license be suspended because I filed bankruptcy?

 

The Bankruptcy Code states that the government cannot “deny, revoke, suspend, or refuse to renew a license” to a person who has filed bankruptcy.  See 11 U.S.C. § 525(a).  This protection isn’t limited to driver’s licenses, but also extends to protect debtors with licenses needed for employment, such as real estate licenses, medical licenses, and law licenses.

OBJECTION/MOTION TO DISMISS IN YOUR CHAPTER 13 BANKRUPTCY CASE?

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Texas Bankruptcy: A couple times a month I get a phone call or email from a client in distress because they received a copy of an objection to confirmation or a motion to dismiss their bankruptcy case.  I have mixed feelings about these types of phone calls and emails.  I am slightly frustrated, because during my meeting with each chapter 13 client, I tell them that they will receive these types of documents from the court and I explain what they mean.  On the other hand, I am also pleased that my client has taken an interest in making sure their case succeeds, that they are reading the documents they receive from the court, and care enough to contact me to ask for an explanation.  Usually the latter feeling of satisfaction with my client outweighs the former irritation with being called to explain what has already been explained.  I have noticed that the clients that call me with these types of questions are also the same clients that tend to be successful in bankruptcy, complete their chapter 13 plan, and receive a discharge.

 

I have gotten off topic.  The purpose of this article is to explain the meaning of an objection to confirmation and a motion to dismiss.  Objections to confirmation are filed by creditors and the chapter 13 trustee when they want documents filed or amended or changes made in the debtor’s plan.  These types of objections occur in almost all chapter 13 cases.  In most cases, the debtor’s attorney will resolve these objections by filing additional documents, amending the documents already filed, or working out some type of agreement with the trustee or the creditors.  Objections to confirmation rarely result in the bankruptcy case being dismissed.

 

Motions to dismiss are usually filed by the chapter 13 trustee and are filed for many different reasons.  The most common reason for these motions is that the debtor is not making payments timely under the chapter 13 plan.  When this occurs, the debtor has several options for curing the delinquency so that the case can continue, including making additional payments or modifying their chapter 13 plan.  Motions to dismiss are also commonly filed for failure to provide documents to the trustee or when a plan takes too long to confirm.  Debtors who receive these types of motions should consult their attorney to determine the best way to keep their case from being dismissed.

CHAPTER 7 BANKRUPTCY: REDEEMING SECURED PROPERTY

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One of the benefits of filing Chapter 13 bankruptcy is that you can sometimes cram down secured debt on vehicles.  This means that you can force a creditor to accept repayment of a loan by paying the value of the vehicle rather than the entire claim.  Chapter 7 bankruptcy has a similar tool available to debtors with secured property that has depreciated below the claim amount.  Debtors can choose to redeem property by making a single payment to the creditor in an amount equal to the value of the vehicle.  For example, if a debtor owns a car worth $5,000 but still owes $15,000 to the creditor holding the note, the debtor can satisfy the entire claim by paying a single payment of $5,000.

 

There is one limitation on redemption.  Debtors who wish to redeem property cannot do so with property belonging to the bankruptcy estate, meaning nonexempt property.  For example, if you chose Texas exemptions in your schedules, the  money that is in your bank accounts or in the form of stocks and bonds that are not exempt retirement accounts is nonexempt property.  Since this property is nonexempt, it is property of the bankruptcy estate and might be used to make payments to your creditors.  This money cannot be used to redeem property of the debtor, because it no longer belongs to the debtor.

 

Redemption has one other obvious problem.  Most people that would benefit from redemption do not have enough money to make the single payment to the creditor to redeem their property.  Fortunately, there are lenders who specialize in loaning money to debtors who wish to redeem property.  These lenders usually offer high interest loans, so the money saved by redeeming the property should be carefully weighed against the interest which will accrue over the life of the loan.  For many debtors redemption loans are a good way to restructure debt and save a good deal of money.

CHAPTER 7 BANKRUPTCY: NEGOTIATING A BETTER DEAL ON YOUR SECURED DEBT

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The purpose of filing Chapter 7 bankruptcy is to discharge debt.  However, discharging debt doesn’t remove liens on secured property, so although your liability for repaying a debt may be discharged, if you don’t continue making payments to secured creditors, they will likely enforce their lien through foreclosure or repossession.  Debtors who wish to keep secured property after discharge can choose to reaffirm a debt.  Reaffirmation agreements are contracts between the debtor and the creditor setting out the terms of what is owed by the debtor to satisfy the creditor’s claim.  These agreements are filed with the Court and require an order from a bankruptcy judge approving the agreement.

 

Generally creditors offer to reaffirm debts under the original contract terms, but there is no law or rule stating that the terms can’t be renegotiated.  Debtors should offer to reaffirm their debt at a lower interest rate or to reduce the balance owed if they are upside down on the loan.  For example, if a car is worth $10,000 and the debtor owes $15,000 under the original contract payable at 12% interest a year, they should consider offering to reaffirm the debt for $10,000 at a lower interest rate.

 

Keep in mind that the creditor doesn’t have to agree to the new terms.  They may turn you down or make a counteroffer.  Some creditors refuse to renegotiate terms in reaffirmation agreements.  But I have found that this is a small minority of creditors.  Most creditors will consider the debtor’s offer and weigh it against what they will likely get for the property at auction, and make a smart financial decision.

DEAR BANKRUPTCY PROCRASTINATOR,

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I understand what it means to be a procrastinator.  I have been one most of life.  My mother will tell you I was late being born.  My wife could share with you how we dated for six years before I asked her to marry me.  I like to think of myself as a reformed procrastinator.  I have spent the last ten years making a conscious effort to not leave until tomorrow what can be done today.  But I still have the urge from time to time to procrastinate.

 

For most situations a little procrastination doesn’t hurt.  You wait to the last minute to pay your bills.  You buy Christmas gifts the week of Christmas.  Usually, a little procrastination does no harm.  But when you are in debt, procrastination can cost you a lot.  For example, if your car is repossessed, in Texas a bankruptcy attorney can get you your car back if you act quickly.  There is a short window of time after a repossession to file bankruptcy and request from the creditor that the car be returned.  If you wait too long and your car is sold, then you will be out of luck.  The same is true of homes and foreclosure.  A bankruptcy attorney can stop a foreclosure up until the minute before the foreclosure sale takes place.  But after the auction is completed, it is usually too late.

 

Procrastination can also affect how much filing bankruptcy will cost you.  I don’t mean attorney’s fees.  In Chapter 13 cases, you may have to pay back money to your unsecured creditors.  Unsecured creditors are credit cards, charge accounts, medical bills, and other debts that aren’t protected by a lien against collateral.  The amount you have to pay to these creditors depends on your income.  Many debtors end up paying back all of their unsecured debt.  So, it makes sense that the more unsecured debt these debtors have, the more they will have to pay in their bankruptcy case.  The problem is that debt grows.  It accrues interest and fees are applied for late payments.  When a bankruptcy case is filed, the fees and interest stop accruing.  The debt stops growing.  So debtors who file early end up paying less than debtors who procrastinate.

 

Sometimes people procrastinate because they are afraid of what they don’t know.  Talking to a bankruptcy attorney acknowledges that they are in serious financial trouble, so they put it off as long as possible.  But eventually debt has a way of catching up with you.  Confronting the problem early can save you thousands of dollars, your car, and even your home, so don’t procrastinate!