Credit Counseling Requirements

Under the changes to the Bankruptcy Code that took effect October 17, 2005, a person filing either a Chapter 7 or a Chapter 13 is required to take two short credit counseling courses, one before you file bankruptcy (credit counseling), and one after you have filed your case (financial management). The credit counseling agency must be approved by the United States Trustee. The counseling sessions can be done over the phone or internet, or in person, and take about a half hour to an hour. The agencies charge a small fee for the courses.

Approved Credit Counseling Agencies

Approved Financial Management Course Providers

Bankruptcy is morally and biblically OK!

A lot of times I have potential clients that come in to my office with heads hung low griping and grousing about how they just can’t make it anymore.  They extoll “I borrowed the money but after I…

  • lost my job
  • got sick or hurt
  • kid’s got sick or hurt
  • reduction in income

I just couldn’t pay them anymore and the credit companies wouldn’t work with me.”  They go on to explain how they were not raised that way and that it is against their values.  It’s usually at that time that I make my appeal to their better judgment.  Bankruptcy is Morally and Biblically OK! First of all, it is a federal law.  A group of people who ARE a lot smarter than I am sat down and realized that sometimes, bad things happen to good people.  They also realized that debtor’s prisons were not the most enlightened response to a financial problem.  Therefore, they came up with a federal LAW that allows people to discharge their debts.  A law that has been used by:

 

  • Presidents: Thomas Jefferson and Abe Lincoln in order to overcome failed business ventures.  If HONEST Abe can file bankruptcy over a failed business venture and go on to become President of the United States it seems that YOU as a debtor could file and reorganize your left for the better and not feel too much shame.
  • Celebrities: P.T. Barnum…yes, that famous Greatest Show on Earth Barnum; Mark Twain; Henry Ford and even our beloved Walt Disney
  • Companies: American Airlines; Texas Rangers (the sports team, not the law enforcement agency) and even Hostess…..say it ain’t so Twinkie…say it ain’t so…

I know I know.  The term “deadbeats” gets thrown around a lot.  (I would imagine Honest Abe would have decked someone for calling him a deadbeat…but that’s just me)  Mainly by creditors. (Not a big fan 🙂  )  The truth of the matter though is that the federal LAW has a significant amount of checks and balances in order to weed the “deadbeats” out from the system.  Which, mind you, comprises a very minute amount of cases.  Most people are just down on their luck decent people looking to survive a crisis.  So why bully them?  There are wise judges, stern trustee attorneys and creditor hired guns all looking through the paperwork to find “deadbeats”.  Must we shame debtors as well?  So does the fact that it is a federal LAW approved by Congress make it morally OK?  Well, that depends on which side your on.  Do you think laws are enacted to protect society? protect the people? for the well being of the world?  Or do you feel that even though a law is enacted it can still be morally bankrupt?

 

As far as biblically OK goes I believe it was Jesus that said in Matthew 6:12 “And forgive us our debts, as we also have forgiven our debtors.”  Some would say it is interpreted as “trespasses” or “sins” but regardless of how you spin it its ultimately an act of forgiveness.  Jesus evens tell the story of the Parable of the Unforgiving Debtor in Matthew 18:21-35.  (I could type out the whole story but honestly, grab a bible and look it up)  If Jesus considers the forgiveness of debt OK then why shouldn’t we as a society?  I believe the root cause of the problem is fairness.  Is it fair that their debt is forgiven while you have to pay yours?  No.  Is it fair that you work two jobs to support your family and to pay your bills and they walk their debts? No.  But…if you want to talk about fairness you need to make sure you not only JUDGE them but also JUDGE yourself.  Is it fair that you have two jobs while someone else is unemployed?  Is it fair that you have a house while other people are homeless?  Unfortunately we tend to judge others by a different standard than ourselves.  Sometimes bad things happen to good people and we, as people and as a society, should not judge them.  We should not shame them.  We should not blame them.  We should bend a knee to the dirt, grab them by their arms and lift them back into our fold gently dusting the circumstances from their shoulders and listening intently to their plight.

                                                                                                          –E

The Benefits of Bankruptcy for Individuals and Businesses

benefits-bankruptcyThere is a stigma attached to the word “bankruptcy” which really does not need to be there. A personal or business bankruptcy lawyer will tell you that it is one of the best things you can do for yourself when you get into financial trouble. Far too many people attempt to get out of debt by taking on more debt in the form of high interest loans. That is not the solution. Restructuring your debt and taking some credit counseling classes like those required now when you file for bankruptcy can help you get on solid ground for good, not just temporarily. There is a process involved to get there, but it is well worth the effort required. The bankruptcy lawyer at Law Office of Eric A. Maskell will help you. Call us today for your free consultation.

FAQ

Q. Will filing bankruptcy stop foreclosure?
A. Both a Chapter 7 and Chapter 13 case filing stops foreclosures on mortgages (homestead, rental, and commercial property mortgages) so long as the sheriff’s sale has not been held. Chapter 13 also allows you to pay back the mortgage arrears on a homestead mortgage in your chapter 13 plan over an extended period of time, while you pay the regular monthly mortgage payments after the case is filed.

Q. Will I lose any of my property if I file bankruptcy?
A. Generally, in a Chapter 13 case you will not lose any property, even if it is not exempt. In most Chapter 7 cases, you are able to exempt (protect) all your property. Under the laws of Texas, and under the federal laws, certain property is declared exempt, and out of the reach of your general creditors. It is the exempt property that you will get to keep after your bankruptcy. We will advise you as to whether or not you have any nonexempt assets which you will either have to surrender to the trustee, or buy back from the trustee. In most cases, you will be able to keep your home, automobile, retirement accounts and pensions, household furnishings, and all your property by claiming either the state or federal exemptions. If the property is security for the loan (ie. home with a mortgage; car with a loan) you will almost always need to keep making the payments to keep the property; or, you can surrender the property to the creditor and the debt is discharged (cancelled).

Q. How much does it cost to file bankruptcy?
A. The court filing fee for a Chapter 7 is $299.00 and for a Chapter 13 it is $274.00. The filing fee is the same whether you are filing individually or jointly with your spouse. The attorney fees for a particular case vary depending upon the complexity of the case. The attorney fees will be determined after a review of your particular facts. We can generally quote you a fee over the phone.

Q. Does filing bankruptcy have to be done by both husband and wife?
A. No. Nevertheless, in most instances the husband and wife will file a joint case if they both have debt. A situation where a joint case would not be warranted is where one of the spouses has little or no debt.  However, even where one spouse files without the other, the bankruptcy laws require that both spouses’ income and expenses be analyzed for purposes of determining whether you qualify for Chapter 7 or Chapter 13. Also, the bankruptcy filing only protects and discharges the debt to the person filing the case. So if there is a joint debt, the spouse who does not file, is still legally responsible to pay the debt.

Q. Do I have to go to Court if I file Chapter 7 or Chapter 13?
A. Generally, you will have to appear in Court only one time. This court appearance is held approximately one month after your case has been filed and is called “The First Meeting of Creditors”. At this hearing, you will be put under oath and questioned by the trustee about the information contained in your petition and schedules, including your assets and liabilities. In most cases, no creditors appear for this hearing.

Q. Can my employer fire me for filing bankruptcy?
A. No. Federal law prohibits employers from terminating the employment of, or discriminating with respect to employment against, an individual who files either a Chapter 7 or Chapter 13.

Q. Can my utility company refuse to serve me if I discharge their bill in bankruptcy?
A. A utility company may not alter, refuse, or discontinue service to, or discriminate against you solely on the basis of a bankruptcy filing that includes the utility. Although, the utility company can ask for a reasonable deposit, within 20 days of the case filing, for continued future service. The deposit is usually two times your average monthly bill.

Q. How does filing bankruptcy affect my credit?
A. Under the Federal Fair Credit Reporting Act, a credit bureau can report the filing of any bankruptcy for ten years from the date the case is filed. Generally, a Chapter 13 is reported for seven years from the date of filing, so long as the case was completed and a discharge was granted. In a Chapter 13 case, you cannot incur any new debts, with some exceptions, until your case is completed. As a rule of thumb, most mortgage companies will not grant a new mortgage to you until two years after the bankruptcy filing. In many instances after a Chapter 7 filing and discharge, you can obtain credit because the creditors know you cannot file Chapter 7 for another eight years, and generally you have little or no debt since the present Chapter 7 discharged all or most of your debt, making you a good credit risk (assuming you have monthly income and ability to pay the new debt).

Q. Should my business file bankruptcy?
A. If your business is struggling financially, you need to know what alternatives are available to resolve your financial problems. Depending upon the structure of your business (sole proprietorship, partnership, corporation, or limited liability company), an out of court workout plan, Chapter 11, or Chapter 13 may be available to you to rehabilitate your business. Early legal counseling and financial planning may help save your business. If the business is shutting down and ceasing operations, then a Chapter 7 may be the appropriate course of action. Also, if you as an individual personally guaranteed the business loans, you may be forced to file an individual Chapter 7 or Chapter 13 to eliminate the personal guarantee.

Where does that leave the HOA?

I was reviewing some information and came acros some interesting issues regarding liens and HOAs.  It seems that when the builder is working the house and before the home is acutally sold the HOA establishes its lien.  So essentially they have a superior lien to the first mortgagor.  However, because of the subordination clause the first lien mortgagor takes a superior lien position to the HOA.  Obviously, a bank wouldn’t want to fund a mortgage for thousands of dollars knowing it had a subordinate lien to the HOA.  Now, the homeowner can’t pay the bills so the first lien creditor files a foreclosure.  The foreclosure action wipes out all subordinate liens.  (Not taxes because taxes are superior liens to EVERYBODY)  So the first lien creditor wipes out the HOA and the second mortgage creditor (if there is one).  The first lien creditor now decides to sell off the property.  They sell the property and now the property, within the HOA neighborhood, is free of an HOA lien.  Unless the potential homeowner that is buying the foreclosed property is willing to subjugate themselves to the HOA voluntarily (which would be nutty)…where does that leave the HOA?

If I am way off base on this I would love to hear it….please post comments or concerns.

-E-

You get what you pay for…

I was doing some work in the office and I found an old intake sheet from a potential client for a bankruptcy.  I decided to look up to see if that client had found another attorney.  A little background on this PC (potential cleint).  I met with them several days in a row and everytime they met me they said that they left their money at home.  They knew my fees and said they were ok with them everytime we met.  Well, finally, we were supposed to sign the contract in order to stop a foreclosure and repossession.  The PC said that they left their money at home but had $350 of it and wanted me to file it for that.  I said no and they said that they would go home and get the remainder.  They left and agreed to meet me to sign the contract.  Well, they never called.  It wasn’t until later that after they missed the appointment that I checked my email and found an email stating that they didn’t feel like we were on the same page and that they would find another attorney for less.  Well, as I said previously, I looked up the PC and they indeed found an attorney that would do it for less.  That attorney filed the case and missed filing the motion to extend automatic stay within 30 days.  Essentially on a subsequent filing within 1 year the debtor is required to file AND have a hearing within 30 days that extends the automatic stay.  The attorney that this PC hired filed the motion 35 days AFTER the bankruptcy was filed.  This means that the automatic stay expired.  No bankruptcy protection.  The mortgage company and the car creditor both confirmed, by motion, that there was no automatic stay.  At this point I assume this debtor is walking AND looking for a new place to live.  You get what you pay for…

-E- 

Reality Fix

I recently read an article in Money magazine’s August issue called The Financial Fix.  The premise “These late-in-life parents want to retire at the same time they’ll be paying three college tuition bills. Can they do it?”  I was a little put off.  First of all I’m not sure what list I ended up on to “deserve” Money magazine monthly but some how it arrives like clock work.  Anyway, the problem I have with the article is that the family of 5 has a load of money and assets.  Their combined income is $165,000 yearly, a $770,000 retirement 401k and three rental properties.  The article stated they put away about $21,500 into their retirement annually with a $12,000 match.  Oh wait…it did say they were hobbled by $25,000 in credit card debt.  Seriously?  I had a hard time caring.  This couple with 3/4 of a million dollars in retirement was concerned on how they would pay for college and still retire?  What about the single mother who works three jobs to put food on the table?  The teacher that works a summer job so that she can pay bills?  How about an article that reflects the current 9% unemployment rate rather than someone who has more money in retirement than some people make their ENTIRE lives?  I’m tired of seeing articles about this government bail out and that stock plunge.  Where are the stories of real people?  Those that are suffering the unemployment? debt? loss?  The stories of hope? faith?  Back when Madoff ripped off a bunch of investors I saw a lot of articles about rich and famous people who lost money.  What about the little guy?  Maybe I will need to go read ‘No Money’ magazine in order to get real advice.

-E-

Been there….Done that

Hollywood has missed the mark.  I hate remakes.  To me, remaking a movie, screams “lack of originality”.  I know I know.  Maybe you can make it better or place your ‘stamp’ on it.  Bottom line is, it is still a remake.  A copy.  A been there…done that kind of deal.  Today I read an article about Kate Beckinsale in a remake of ‘Total Recall’.  It was actually an article about how her stunt double looks just like her.  Go figure.  Anyway, it mentioned it was for a remake of ‘Total Recall’.  I like Kate Beckinsale as much as the next guy.  She is fairly hot.  But enough is enough.  Please, Hollywood, for the love of the ’80s stop remaking movies.  So far I have heard that there is a remake of War Games in the works.  Shall we play a game?  Yea, it was cool the first time because we were in that, new age of computers thing where we could be duped into thinking that could happen with computers.  What young computer enthusiast, didn’t run out and try to find a war-dialer so they could randomly call computers?  Or Red Dawn?  Wow.  Everytime we went camping after that someone would run through the woods yelling ‘Wolverines!’  Now they aim to remake that as well.  Sigh.  Maybe it’s about nostalgia.  Maybe they think that those of us that grew up in the 80’s will rush with our kids in tow to watch a remake of a movie we were enthralled by.  I doubt it.  I for one see that it is a remake and I check the ‘will wait for DVD box’.  Has the well of originality finally gone dry in Hollywood?  I saw a statistic that said that every year 300,000 scripts are submitted to movie companies.  And we get remakes of War Games, Total Recall, and Red Dawn to name a few? Sigh. (did I say that already?)  There are great movies out there to be seen…to be made…  Let’s get to it.
                                                                                                                      -E-

Redesign

I’m in the process of redesigning my blog.  I figured “Difficult Times” was a little oft-putting so I went with Legal E.  Let me know what you think.  Basically going to try and cover whatever suits my fancy.