Bankruptcy in Texas, Part 4
Continued from Bankruptcy in Texas, Part 3
Advantages of Chapter 13 over Chapter 7
As I've written before (these criteria don't vary from state to state, generally speaking):
In addition to the benefits of Chapter 7, you can:
- keep property that is secured by a lien by paying for it through the Chapter 13 plan. This can save a home from foreclosure, or stop repossession of a car;
- stop evictions, if filed before the 5 day notice or other lease termination expires and if you can pay the back rent owed through the Chapter 13 plan. If you cannot repay all of your debts, but have made the best effort to pay that you can, you can get a discharge of the balance left on your debts, although you cannot remove a lien unless you have paid it off through the plan;
- discharge all debts, except alimony, child support, criminal fines and restitution, damages to individuals caused by drunk driving or intentional torts, money owed due to fraud, theft or embezzlement, most taxes and long term debts, such as mortgages. Student loans are not discharged unless denying a discharge would cause an undue hardship to the debtor.
Special rules for Chapter 13
If you fall behind on your payments, the payments can be deducted directly from your paycheck. While you are in Chapter 13 you cannot get new credit without the trustees approval.
There are also limits the the amount of debt you can have and still be eligible for Chapter 13. A debtor cannot have secured debts over $1,081,400 or unsecured debts over $360,475. [Note: Even though the common perception is that Chapter 11 is only for business reorganization, individuals who owe more than these limits do have Chapter 11 protection available. The downside is that it costs more to file under Chapter 11--because it's more involved and therefore your attorney has more work to do. The upside is that Chapter 11, for an individual, can be even more flexible than Chapter 13.]
The 341 meeting
BAPCPA requires each debtor to appear before a judge at least once and keeps in effect the "Creditor's Meeting," usually referred to as the 341 meeting. Under these dual-pronged mandates, it's likely you attend a meeting that could be in a court or anyplace else the court approves that can also handle a group setting (in these times of hardship, you can expect to be part of fairly large group), in which a judge addresses everybody, then you get lectured, then you're fair game for creditors. I went to the building where my Trustee keeps an office, although on another floor, and found my anxiety to be unwarranted.
In theory, this could be a big, stressful deal: sitting through a routine lecture in the morning, then facing any creditor who shows up to grill you and maybe even challenge the plan you have filed. The IRS can even show up, if you haven't yet caught up with any overdue income tax filings.
Typically, in consumer bankruptcies, no creditors show up. In my case, neither creditors nor IRS attended. Instead, my attorney led me into a smaller room where we met with the Trustee, who asked me questions she's required, by law, to ask. I wouldn't say she was friendly, exactly--but certainly neither rude nor condescending. Let's just say "professional." (And, had it been otherwise? I had my attorney, right there.)
Avoiding bankruptcy mills
My last opinion is this: do not get hooked up with a 'bankruptcy mill," in which you meet once with the main attorney, then forever more deal with underlings who may not return calls. You should not expect to be able to reach your attorney after business simply because you get freaked out about something you realized after hours--or something you just read on the Internet. By the same token, when you have legitimate questions, your answers should be forthcoming, let's say, within a business day or two. Further, if you leave a message with clearly explained emergency, that should get a response in an appropriate time frame. That is to say, lack of response should not cause the case to be dismissed. You deserve to have your fears calmed and realize that your case is in good hands, with an attorney who knows the overall code as well as the local court system.
Consider free case evaluation
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