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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  • What Does It Cost to File for Bankruptcy?

    If you are considering filing for bankruptcy you already know that money is tight. It is important to understand the filing fees and attorney fees that accompany a bankruptcy.

    Filing Fee

    There are two types of bankruptcy filings for most consumers: chapter 7 and chapter 13. The down payment for Chapter 7 depends on the complexity, but generally speaking, half the work is done before the case is filed.  As such, our office usually charges $1,340.00, including court costs, to get the case on file, while the down payment for a Chapter 13 is usually only $500. This is true whether filing as a single person or as a married couple.

    Attorney Fee for Chapter 7

    When you file under Chapter 7, you’ll generally have to pay up-front. The average attorney fee for a bankruptcy attorney in San Antonio is around $2,000 However, fees vary depending on the complexity of the case the demand for your attorney’s legal services.  Cases involving difficult or novel issues may require a more experienced attorney who may charge more than one who is encountering these issues for the first time.  Usually, a simple “no asset” case costs less than one that would require extensive litigation over potential assets of the estate. At the Packard Law Firm, David Packard is Board Certified to practice Bankruptcy and will charge about $1,900 in fees for a typical Chapter 7 case.

    Attorney Fee for Chapter 13

    Chapter 13 Bankruptcy cases are, on average, much more complex. They require you to work with a Trustee to create a repayment plan that will last for three to five years. Generally, the attorney will charge a portion of the attorney fee up front and the rest of the attorney fee can be made through the Chapter 13 Bankruptcy plan. Like a Chapter 7, Attorney fees in a Chapter 13 can vary, depending on the complexity of the case. However, it is customary for the Packard Law Firm to charge an attorney's fee $3,600 for a typical Chapter 13 case.

    Getting Legal Help without having to hire counsel?

    It is possible to file “pro se,” that is, without legal representation. It is also possible, if your income is low enough, to obtain free legal aid. However, filing for chapter 13 in particular is complicated and can be confusing. When looking for legal assistance with a bankruptcy, you often get what you pay for. Take this decision seriously and find someone that knows local rules, the overall system, the local trustees, and what kinds of thing the judges care about most. Find someone that you can trust, contact Packard Law Firm today.

     

  • What Property Can I Keep with a Bankruptcy?

    In a Chapter 7 case, you can keep all property which the law says is "exempt" from the claims of creditors. You can choose between your exemptions under your state law or federal law. In many cases, the federal exemptions are better.

    Federal Exemptions

     

    11 U.S.C. §522

    Single Debtor

    Married Couple

    Exemption

    (d)(1)

    $22,975.00

    $45,950.00

    Homestead (Must be residence)

    (d)(2)

    $3,675.00

    $7,350.00

    Vehicles

    (d)(3)

    $12,250.00

    $25,500.00

    Household Goods, Books, Animals
    no more than $575 per item

    (d)(4)

    $1,550.00

    $3,100.00

    Jewelry

    (d)(5)

    $1,225.00

    $2,450.00

    In any property, plus part of the unused exemption in your home, up to $10,300

    (d)(6)

    $2,300.00

    $4,600.00

    Tools of the trade (including work vehicle)

    (d)(7)

    100%

    100%

    Life insurance contract

    (d)(8)

    $12,250.00

    $24,500.00

    Loan value against life insurance (minus premiums)

    (d)(9)

    100%

    100%

    Health Aides

    (d)(10)(A)

    100%

    100%

    Social Security & Unemployment

    (d)(10)(B)

    100%

    100%

    Veterans Benefits

    (d)(10)(C)

    100%

    100%

    Disability

    (d)(10(D)

    100%

    100%

    Alimony, Child Support (to the extent reasonably necessary)

    (d)(10)(E)

    100%

    100%

    Government benefits & pension, IRA, 401k & retirement (to the extent reasonably necessary) unless insider setup.

    (d)(11)(A)

    100%

    100%

    Restitution for benefit as a victim

    (d)(11)(B)

    100%

    100%

    Payment for wrongful death of a dependent (to the extent reasonably necessary)

    (d)(11)(C)

    100%

    100%

    Life insurance from death of person to which the debtor was a dependent (to the extent reasonably necessary)

    (d)(11)(D)

    $22,975.00

    $45,950.00

    Personal injury cases (does not include pain & suffering or loss of income)

    (d)(11)(E)

    100%

    100%

    Payment of settlement due to loss of income, (to the extent reasonably necessary)

     

     

    Texas Exemptions

     

    Description of Property

    State of Exemption
    Statute

    Limit

    Homestead. 200 acres for family (100 acres single adult) of rural land OR ten acres of urban land (land may be in one or more parcels and improvements are included; no value limit)

    Const.Art. 1 Secs. 50,51/Property Code Sec 41.001, 41.002

    100%, subject to some limitations.

    Proceeds of voluntary sale of homestead (protected for 180 days after sale).

    Texas Property Code Sec. 41.001(a)

    100%

    Lots held for burying grounds.

    Texas Property Code Sec. 41.001(a)

    100%

    Home furnishings, include family heirlooms.

    Texas Property Code Secs. 42.001(a), 42.002(a)(1)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Provisions for consumption

    Texas Property Code Secs. 42.001(a), 42.002(a)(2)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Farming or ranching vehicles and implements.

    Texas Property Code Secs. 42.001(a), 42.002(a)(3)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Tools, equipment, books and apparatus used in trade or profession

    Texas Property Code Secs. 42.001(a), 42.002(a)(4)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Wearing apparel

    Texas Property Code Secs. 42.001(a), 42.002(a)(5)

    $30,000.00 per debtor for all of Sec.42.002(a)

    Jewelry ($7,500.00/$15,000.00 Limit in addition to group limit of $30,000.00/$60,000.00). Only the group limit will be calculated.

    Texas Property Code Secs. 42.001(a), 42.002(a)(6)

    $30,000.00 per debtor for all of Sec.42.002(a)

    Two firearms

    Texas Property Code Secs. 42.001(a), 42.002(a)(7)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Athletic and sporting equipment, including bicycles.

    Texas Property Code Secs. 42.001(a), 42.002(a)(8)

    $30,000.00 per debtor for all of Sec.42.002(a)

    One motor vehicle (2,3 or 4 wheeled) for debtor with drivers license or driver.

    Texas Property Code Secs. 42.001(a), 42.002(a)(9)

    $30,000.00 per debtor for all of Sec.42.002(a)

    2 horses, mules or donkeys plus a saddle, blanket and bridle for each, 12 head of cattle, 60 head of other types of livestock, 120 fowl, forage on hand for each animal.

    Texas Property Code Secs. 42.001(a), 42.002(a)(10)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Household pets

    Texas Property Code Secs. 42.001(a), 42.002(11)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Present value of life insurance policy payable to family member or dependent.

    Texas Property Code Secs. 42.001(a), 42.0021(a)(12)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Unpaid commissions for personal services. (Subject to an additional limit of $7,500.00 per debtor)

    Texas Property Code Sec. 42.001(d)

    $30,000.00 per debtor for all of Sec. 42.002(a)

    Professionally prescribed health aids.

    Texas Property Code Sec. 42.001(b)(2)

    100%

    Current wages for personal services.

    Texas Property Code Sec. 42.001(b)(1)

    100%

    Proceeds of property of I.R.C. qualified personal or corporate retirement plans.

    Texas Property Code Sec. 42.0021

    100%

    Partner's interest in partnership property.

    VACS Art. 6132b, sec. 25

    100%

    Employees group life insurance benefits & contributions

    Texas Insurance Code Art. 3.50-2, Sec.10, Art. 3.50

    100%

    Benefits paid under life, health or accident insurance policies.

    Texas Insurance Code Art. 21.00, Sec. 1

    100%

    Fraternal Benefits Society Benefits

    Texas Insurance Code Art. 10.28

    100%

    Unemployment compensation benefits.

    VACS Art.5221b-1(c)

    100%

    Workers compensation benefits

    VACS Art. 8306, Sec.3

    100%

    Public Assistance benefits.

    Texas Humble Residents Code Sec. 31-040

    100%

    Medical assistance payments to needy.

    Texas Humble Residents Code Sec. 32-036

    100%

    State employees retirement and pension benefits.

    VACS Title 110B, Sec. 21.005

    100%

    Judicial system retirement benefits.

    VACS Title 110B, Sec. 41.004

    100%

    Law enforcement officers' survivors' benefits

    Vacs Art. 6228f, Sec.8

    100%

    County & District employees pension and retirement benefits.

    VACS Title 110B, Sec. 51.006

    100%

    Municipal employees retirement benefits.

    VACS Title 110B, Sec. 61.006; Art. 6243g Sec. 20

    100%

    Police, fireman & fire alarm operators pension, relief & retirement benefits.

    VACS Art. 6243a Sec. 12 to 20 and 6243a-6243-j

    100%

    Teachers pension & retirement benefits.

    VACS Title 110B, Sec. 31.005

    100%

    Crime victims compensation.

    VACS Art. 8309-1, Sec. 7(f)

    100%

    Public School employees insurance benefits and contributions

    Texas Insurance Code Sec. 3.50-4(11)

    100%

    Foreign Service Retirement and disability benefits.

    22 U.S.C. Sec. 1104

    100%

    Social Security Benefits (include retirement, death and disability benefits).

    42 U.S.C. Sec. 407

    100%

    Injury or death compensation payments from war risk hazards

    42 U.S.C. Sec. 1717

    100%

    Wages due masters, seamen and apprentices.

    46 U.S.C. Sec. 601

    100%

    Civil service retirement benefits.

    5 U.S.C. Secs. 719,2265

    100%

    Longshoreman and harbor workers medical, disability and death benefits.

    33 U.S.C. Sec. 916

    100%

    Railroad employees retirement and disability annuities.

    45 U.S.C. Sec. 228(l)

    100%

    Veteran's group life insurance benefits.

    38 U.S.C. Sec. 770(g)

    100%

    Veteran's Administration benefits (includes pension, life insurance and disability benefits ).

    38 U.S.C. Sec. 3101

    100%

    Federal homestead lands and debts contracted before insurance of the patent

    43 U.S.C. Sec. 175

    100%

    In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.

    You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it.

    While your exemptions allow you to keep property even in a Chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a Chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law.

    In most cases you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.

  • What Different Types of Bankruptcy Cases Should I Consider?

    There are four main types of bankruptcy cases provided under the law:

    • Chapter 7 is known as "straight" bankruptcy or "liquidation." It requires an individual to give up property which is not "exempt" under the law, so the property can be sold to pay creditors. Generally, those who file Chapter 7 keep all of their property except property which is very valuable or which is subject to a lien which they cannot avoid or afford to pay.
    • Chapter 11 (known as reorganization) is used by businesses and a few individuals whose debts are very large.
    • Chapter 12 is reserved for family farmers and fishermen.
    • Chapter 13 is a type of "reorganization" used by individuals to pay all or a portion of their debts over a period of years using their current income.

    Most people filing bankruptcy will want to file under either Chapter 7 or Chapter 13. Either type of case may be filed individually or by a married couple filing jointly.

    Chapter 7 (Straight Bankruptcy)

    In a bankruptcy case under Chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property, which the law allows you to keep. In most cases, all of your property will be exempt. In the relatively few consumer cases where there is non-exempt property, the property is sold, and the rusulting funds are used to pay your creditors.

    If you want to keep property like a home or a car, but are behind on the payments on a mortgage or car loan, a Chapter 7 case probably will not be the right choice for you. That is because Chapter 7 bankruptcy generally does not eliminate or reorganize the rights of mortgage holders or auto loan creditors. If you fit this situation a Chapter 13 may be a more attractive alternative.

    If your income is above the median family income in Texas, you may have to file a Chapter 13 case (The Texas median family income for a family of four in 2014 was $69,570 – this number is adjusted periodically). Higher-income consumers must fill out "means test" forms requiring detailed information about their income and expenses. If the forms show that they have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that they can not file a Chapter 7 case, unless there are special circumstances.

    Chapter 13 (Reorganization)

    In a Chapter 13 case you file a "plan" showing how you will pay off some of your past-due and current debts over the next three to five years. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property--especially your home and vehicle--which might otherwise be lost, as long as you can make your plan payments. In many cases, Chapter 13 functions as a bill consolidation of secured debts.

    You should consider filing a Chapter 13 plan if:

    • you are behind on debt payments (such as house note or car note), but can catch up if given some time
    • you have valuable property which is not exempt, but you can afford to pay creditors from your income over time
    • you have secured debts with high interest rates which you cannot afford to pay.

    You will need to have enough income in Chapter 13 to pay for your necessities and to keep up with the required payments as they come due.

  • What Can Bankruptcy Do for Me?

    Bankruptcy can be a very powerful tool for you and your family when faced with a serious debt problem. Through bankruptcy a person can do the following:

    Wipe out unsecured debts

    Bankruptcy can eliminating unsecured debt. Essentially, a debt is unsecured if a person or organization does not have collateral or a mortgage on your assets. The most common example of unsecured debt is in the from credit cards. (To learn more about the difference between secured and unsecured debt, see "What Is The Difference Between A Secured And Unsecured Creditor?")

    When this debt is eliminated, your debt is “discharged”; meaning that you no longer have a legal obligation to repay those debts. Bankruptcy is designed to give you a fresh financial start.

    Stop foreclosure on your home

    When a Chapter 7 or Chapter 13 bankruptcy is filed, an “automatic stay” immediately goes into effect, stopping almost all collection efforts from your creditors. With few exceptions, the automatic stay will protect you from collection efforts, such as a home foreclosure. This is a powerful tool and is triggered simply by filing the bankruptcy and does not require any action by a judge or other legal procedure to become effective.

    Prevent repossession of a car or other property.

    Once a bankruptcy is filed, a creditor is not allowed to repossess the property, with very few exceptions. If it has already been repossessed, the creditor is forced to return the property (usually within a 10-day redemption period).

    In a personal bankruptcy reorganization (Chapter 13) you make payments to a trustee, who turns around and makes disbursements to your creditors. While you are waiting for your bankruptcy plan to be confirmed by the court, some of your creditors will receive “protection payments,” especially if they have a lien on your car which may be depreciating. If you do not make the “protection payments”, then the auto lender could ask the judge for special permission to repossess the car. Later, once your bankruptcy plan is confirmed with the judge, you can keep the car by paying the proper claim amount.  (To learn more about your property during bankruptcy, see “What will happen to my home and car if I file for bankruptcy?”)

    Stop debt collection harassment and wage garnishment.

    The most powerful and immediate protection in bankruptcy is the “automatic stay,” which stops most collection efforts. When you file for bankruptcy, your attorney gives a list of your creditors and their addresses to the court. The court will then notify each creditor of your bankruptcy. The creditor must then stop garnishing your wages (with very few exceptions such as ongoing child support). Additional debt collection efforts will be considered a violation of bankruptcy laws, unless they obtain specific permission first. There are strict penalties to creditors that engage in knowing violation of the automatic stay in bankruptcy. (To learn more about collection harassment after filing Bankruptcy, see “Creditor Calls After Bankruptcy?”)

    Speak To a Texas Bankruptcy Lawyer Today