Contents

1. How can filing a bankruptcy case help me?
2. What type of bankruptcy case should I consider?
3. How much does it cost?
4. Do I have to list and disclose all of my assets and debts in my petition?
5. Do I have to give up my house, retirement, vehicle or any other personal property if I file for bankruptcy?
6. What debts cannot be discharged in a Chapter 7?
7. What is the difference between a secured and unsecured debt?
8. How will a Chapter 7 or 13 affect my credit?
9. How can I reestablish credit after filing a bankruptcy?
10. Can I lose my job because I file bankruptcy?
11. How will a bankruptcy affect a cosigner of one of my debts?
12.  How do I get started and what is my first step?

1. How can filing a bankruptcy case help me?

Bankruptcy may make it possible for you to eliminate most or all of your debts. It is designed to help you get a fresh financial start, without credit card and other unsecured debt. It can: halt the foreclosure of your home and allow you to catch up on overdue payments; prevent lawsuits and repossession of property; stop harassment by ruthless collection predators; and challenge creditors who have fraudulently tried to collect more than is owed. The filing of a bankruptcy includes the protection of a restraining order prohibiting creditors from calling you at home or at work. It also stops any court action.

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2. What type of bankruptcy case should I consider?

You will most likely consider Chapter 7 or Chapter 13. Chapter 7 is known as a straight bankruptcy, or liquidation, in which the applicant forfeits property that exceeds certain statutory exemption limits. In Texas most applicants do not forfeit any property. Chapter 13 is called a reorganization or debt adjustment. It requires an applicant to file a plan to pay old debts (or partial amounts) from current income for three to five years. You should rely on the advise of your lawyer on what type of bankruptcy case to file.

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3. How much does it cost?

For Chapter 7 and 13 cases, we charge on a flat-rate basis rather than on an hourly basis. This means the quoted amount for the attorney fee includes all necessary consultations, drafting and filing of the petition and schedules, appearance of an attorney at the creditor hearing, and subsequent routine dealings with your creditors. The fee for a Chapter 7 is $975.00, which includes the $200.00 filing fee. The fee for Chapter 13 reorganization is $1,475.00, including the filing fee. In either type of case $975.00 must be paid when your case is filed. Chapter 11 cases are charged on an hourly basis, with a retainer placed in trust, and advance approval of the judge for all charges.

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4. Do I have to list and disclose all of my assets and debts in my petition?

Yes. If you wish to retain a dischargeable debt we will prepare a ©reaffirmation agreement© which allows you to do this.

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5. Do I have to give up my house, retirement, vehicle or any other personal property if I file for bankruptcy?

No, not usually. You have the option to claim personal and family exemptions under either federal law or Texas law.  This is a complex issue we will discuss. Both options allow you to retain all of your statutorily exempt property. In Chapter 13 reorganization, you may retain all of your property under the ©Reorganization Plan© which is formulated.  In almost every Chapter 7 case clients retain 100% of their property. Any issue regarding the possible surrender of any non-exempt asset will be fully discussed with your lawyer.  Under Chapter 7, to the extent that a debt is a ©secured debt© in some of your property (for example, your home or automobile), you may choose to retain that asset by continuing regular payments and signing a ©Reaffirmation Agreement.©

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6. What debts cannot be discharged in a Chapter 7?

Bankruptcy cannot cure every financial problem. It is usually not possible to eliminate rights of secured creditors or discharge debts such as child support, student loans, court restitution orders, fines and some taxes.

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7. What is the difference between a secured and unsecured debt?

Simply stated, secured debts are debts in which the property purchased has been pledged as collateral for the repayment of the debt. If you default in a payment, the creditor may repossess the property. An example is an automobile loan in which the bank holds the original title to the vehicle.  In Chapter 7 you have the option of either keeping the vehicle and timely continuing payments or returning it and paying nothing. In a Chapter 13 case you may keep security and repay it through a ©Chapter 13 Plan© devised by you and your lawyer. If the value of the item is less than the amount of the loan, the excess amount of the loan (amount of loan less the value of the collateral) is paid under the plan as an unsecured debt.

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8. How will a Chapter 7 or 13 affect my credit?

A common misconception is that once you file bankruptcy you can never again have good credit. How a Chapter 7 or 13 will affects you in the future depends upon many different factors. Each creditor uses its own criteria to determine future creditworthiness. Annual income and job stability are key factors that a creditor will consider in determining future credit. They will also review how you have handled credit since your bankruptcy case was filed. Remember that any time a creditor is not being timely paid under a contract, a negative comment can be placed on your credit record. Any repossession, foreclosure, slow payment, or nonpayment has a negative effect on your credit record. A Chapter 13 and a Chapter 7 also have a negative effect, but that alone will not prevent you from reestablishing your credit and obtaining credit in the future. Bankruptcies remain on your credit report for about 10 years. Regardless of this fact many people receive offers of new credit immediately following a bankruptcy.

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9. How can I reestablish credit after filing a bankruptcy?

There are many institutions that offer secured MasterCard and Visa accounts. They require a nominal deposit (usually less than $500.00) and allow you a credit line based on the amount of money on deposit. If you use these credit cards regularly and wisely and make prompt payments, your credit report will state: "paying as agreed," which is acceptable to future creditors. As to vehicle and new home loans, you should check around. Some lenders may deny credit, but there are many other lenders who will finance a new home or automobile.  A good market for home loans are residences financed by the owner. Supply and demand often determine a lender©s policies. If a company wants to make a sale or write a loan, it will extend you credit. One word of caution: some lenders or finance companies will tell you they can "make the loan" and then charge you a higher interest rate. This is why it is extremely important to shop around for credit. There is absolutely no valid reason to charge a higher interest rate based solely on the reason you have filed for bankruptcy protection. If you are turned down, try another seller or lender. Frequently buyers are only concerned with getting approved for the loan and fail to get the best possible interest rate.

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10. Can I lose my job because I file bankruptcy?

No, the Bankruptcy Code prohibits your employer from firing you. Although a bankruptcy petition is a public record, under normal circumstances only creditors are advised of the filing of the bankruptcy. For all intents and purposes the only persons who learn of your bankruptcy filing are your creditors.

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11. How will a bankruptcy affect a cosigner of one of my debts?

In a Chapter 7 proceeding, unless both parties to the contract file bankruptcy, the creditor may pursue collection against the non-filing party. If the filing party ©reaffirms© the debt and maintains current payments, the cosigner should not be affected. The Chapter 13 Plan can be structured so that the co-signed debt is paid in full through the plan and the creditor is prohibited from taking action against the non-filing cosigner.

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12. How do I get started and what is my first step?

You have already taken the first step by obtaining general information. If you believe that either bankruptcy or reorganization may solve your financial problems, call Frank Waltermire at 800-682-0202 for an appointment. There is no charge for either a telephone or office consultation. It is extremely important to choose a lawyer who will respond to your personal situation. If the lawyer is too busy to meet with you and answer your questions you may not have the right lawyer.

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Contact Information

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Frank Waltermire is not currently certified in any specialty but was formerly Board Certified in Civil Trial Law with the Texas Board of Legal Specialization from 1984-2004.  Please email questions or comments about this web site to frank@greaterhoustonbankruptcy.com.  Copyright © 2003 , Frank Waltermire. All rights reserved.