Answering All Your Bankruptcy Questions
When a catastrophic event puts your future at risk, anxiety and uncertainty will cause you to have a million questions. What can you do? How can you provide for your family? Will you recover?
Allow the extensive experience and knowledge of the Packard Law Firm put your worries to rest. Come learn the answers to your questions and see how we can help pull you out of the depths of uncertainty.
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Why did you decide to become a bankruptcy lawyer?
First of all, I have a passion for taking the legal structure, the bankruptcy code and matching it with peoples lives. I customize a Chapter 13 plan in a way that will match the lifestyle and the obstacles that people are going to have and enable them to keep the things that they will absolutely need.
That is fun for me. I enjoy doing that. I enjoy crunching the numbers. I enjoy working with my staff to customize a bankruptcy plan that will succeed in court and will have a real result that will really help reorganize their life.
"David is a great lawyer. He has been doing bankruptcy for over 20 years. He doesn't pressure people. He talks about the options, lays it out in front of them and explains the different outcomes for the different paths that they can take. If you have questions, give David a call and he will lay out your options in front of you and get you a resolution to your financial problems."
-- Michael Packard, Partner
What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
Chapter 7 Bankruptcy Allows You to Eliminate “Unsecured” Debt
Basically, a Chapter 7 is a way for a person to eliminate their unsecured debts. What they are seeking is a fresh start, a clean slate. They want to continue to pay for certain secured debts, like their house note or their car note, but discharge or eliminate their unsecured debts like credit card bills, medical bills or signature loans.
Chapter 13 Bankruptcy Is a Way to Reorganize Debt over Time
Chapter 13 by contrast is a way for a debtor to reorganize their debts over a plan of 3 to 5 years. What that means is, you are going take the back payments on your house note, the vehicle note, any kinds of loans you have for appliances, lump those all together into a monthly plan payment and pay that out monthly over an extended period of time. That usually allows a person to keep the things that they have worked hard to get in the first place and pay it out and pay their creditors as much as they can afford.
How does a Chapter 13 Bankruptcy allow you to keep the things you need and still significantly lower your monthly payments?
A Chapter 13 bankruptcy allows a person to reorganize their debt by making payments that are significantly less, in most cases, than what they were paying before. And it does it in several ways:
- First, you are only required to pay a certain interest rate to most creditors and right now in most cases it is 5.25%
- Secondly, in many instances you are able to lower the amount that you pay down to the value of the collateral rather than the balance that is owed. So that usually reduces the principal that you pay out.
- Thirdly, you are often able to increase the term over which you pay your creditors to a period up to 5 years.
- And finally, debtors are often able to lower the amount that they pay to their unsecured creditors down to literally pennies on the dollar, if they qualify. At any rate, you are able to pay your unsecured creditors often at zero percent interest.
So with those four tools, a Chapter 13 debtor has the ability to lower their payments to a budget that they can afford while continuing to keep the things that they need in order to reorganize.
If you have any questions about how to reorganize under Chapter 13 or anything about Chapter 7, please fill out our contact form or give us a call and we will be happy to go over it with you.
Can I File Bankruptcy Without An Attorney?
One of the first questions we are asked about bankruptcy is entirely legitimate, ”how can I afford an attorney if I’m bankrupt?” The very reason for considering bankruptcy in the first place means that folks are (and should be) very particular about attorney fees. So how should one go about dealing with the fee issue?
Consider The Outcome
For starters, filing bankruptcy “pro se” (without an attorney) is certainly permitted by law. We have seen it done many times, sometimes successfully, especially if it’s a chapter 7. If you know most of the common issues, and if you have a knowledgeable person assisting you, we think you will succeed about half the time if it’s a chapter 7. Therefore, your decision needs to consider the likelihood of successful outcome and the cost if it doesn't turn out so well.
Most often, we believe you should still get an attorney even if it's a straightforward chapter 7. Our concern is that often you don't really know if not hiring a lawyer was a mistake until after the fact. The sheer magnitude of the cost of some mistakes often dwarf the attorney fee. (Most attorneys, including our firm, can get you in and out of most chapter 7 cases for a fee of under $2,000, which although is still a lot, it’s smaller than the cost of many common mistakes).
Make Sure You Fit These Criteria Before Filing On Your Own
Are there any exceptions? Is it ever “non-crazy” to consider filing pro se? Rarely, but yes. In our view, if you happen to fit the following profile, then perhaps you should at least look into doing a straightforward chapter 7 on your own:
- You have a relatively high tolerance for risk. You’re the kind of person, for example, who would be genuinely comfortable electing to not have any insurance on a home you own. You feel good about the savings more than you lose sleep over the risk.
- You’re good at numbers. And you’re good at understanding how to read complex instructions. For example, you prepare relatively complex tax returns without needing help from a tax specialist, and you’re confident that you will get it right.
- Your own time is not expensive. The time it takes for even fast learners to adequately understand the relevant laws, prepare the forms, and ascertain that nothing is left undone can be significant and should be factored in.
Even if all of the above exist, your decision to go pro se on your straightforward Chapter 7 consumer case should be made only after careful evaluation and reflection. Here is a list of what you should know if you chose to move forward on your own.
What about Chapter 13? We think you should never go a Chapter 13 alone. I have never seen a Chapter 13 case, filed in good faith and lasting longer than a few months, where I thought the Debtor was made better off financially because they saved on attorney’s fees. If filing the Chapter 13 is the right decision, then we believe it is always worth it to get a competent and honest attorney to represent you. No exceptions in chapter 13; you can file pro se, but you really shouldn’t.
Seek Help From a Texas Bankruptcy Attorney
There are times when we as a society are overly concerned. Sometimes we over-purchase warranties and even insurance. However, when it comes to filing for bankruptcy, it is not being overly cautious to seek competent legal counsel who knows not only the law, but the local practices and procedures in San Antonio. Contact Packard Law Firm today by calling 210-880-9395, or fill out a contact form to schedule a free consultation.
How Do I Find a Bankruptcy Attorney?
As with any area of the law, it is important to carefully select an attorney who will respond to your personal situation. The attorney should not be too busy to meet you individually and to answer questions. The best way to find a trustworthy bankruptcy attorney is to seek recommendations from trusted family, friends or other members of the community. You should carefully read retainers and other documents the attorney asks you to sign. You should not hire an attorney unless he or she agrees to represent you throughout the case.
When first meeting a bankruptcy attorney, you should be prepared to answer the following questions:
- What types of debt are causing you the most trouble?
- What are your significant assets?
- How did your debts arise and are they secured?
- Is any action about to occur to foreclose or repossess property or to shut off utility service?
- What are your goals in filing the case?
Will Bankruptcy Affect My Credit?
Yes. The fact that you've filed for bankruptcy can appear on your credit record for up to ten years. Realistically, however, if you are behind on your bills, and especially if you have mounting credit card debt, your credit may already be poor or bad. In such cases, the better question may be to ask: "How important is my credit at this stage?" Since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills. After your discharge, you are legally permitted to borrow money, if desired, and there are a variety of methods to gradually restore creditworthiness after bankruptcy.
What Else Should I Know about Bankruptcy?
Utility services - Public utilities, such as the electric company, cannot turn your service off simply because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.
Discrimination - An employer or government agency cannot discriminate against you because you have filed for bankruptcy.
Driver's license - If you lost your license solely because you couldn't pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.
Co-signers - If someone has co-signed a loan with you and you filed for bankruptcy, the co-signer may have to pay the debt. If you file a Chapter 13, you may be able to protect co-signers, depending upon the terms of your Chapter 13 plan.
What Else Must I Do to Complete My Bankruptcy Case?
Before your case is final you will need to take a financial management course online, by phone, or in person. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust. In a Chapter 7 case, you should sign up for the course soon after your case is filed. If you file a Chapter 13 case, you should ask your attorney when you should take the course. Usually the course costs less than $40.
Will I Have to Go to Court for my Bankruptcy?
In most bankruptcy cases, you only have to go to a proceeding called the "meeting of creditors" to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short, simple procedure where you are asked to verify the information on your schedules and statements and to answer a few questions about your bankruptcy forms and your financial situation.
It is rare to have to appear before a judge at a hearing. This will only happen if complications arise, or if you choose to dispute a debt. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney.
Will Bankruptcy Wipe Out All of My Debts?
Yes, with some exceptions. For example, bankruptcy will not normally wipe out:
- Money owed for child support or other domestic support
- Most fines and penalties owed to government agencies
- Most taxes and debts incurred to pay taxes which cannot be discharged
- Student loans, unless you can prove to the court that repaying them will be an "undue hardship"
- Debts not listed on your bankruptcy petition
- Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan
- Debts resulting from "willful and malicious" harm
- Debts incurred by driving while under the influence
- Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor)