Personal Bankruptcy Attorney In Austin

Bankruptcy is mainly paperwork. Typically, when you call our office, a legal assistant will send you a consultation worksheet to complete and return by email before your appointment with an attorney. This sheet provides information about your debts and about your budget and helps us evaluate whether a chapter 7 or chapter 13 bankruptcy is more appropriate and if there are any potential problems that we need to discuss with you. After you send in that sheet and your most recent paycheck and tax return, you will come in to meet with an attorney or meet with an attorney via Zoom to discuss the process and the basic information we will need from you to handle your case. We will give or email you a packet of paperwork to fill out and a list of documents we will need to review. You return for a second meeting in person or via Zoom to discuss the completed packet with the attorney. The attorney then enters your information into the computer and will email you with any questions or items needed to complete your schedules. Then you return for a third meeting to review and sign the completed paperwork in person or via DocuSign. You will also need to complete a credit counseling session on-line before your case can be filed with the court. Your paperwork will include schedules of assets and liabilities, a monthly budget, and some historical information about income, payments to creditors, and transfers of property.

Once the case is filed, you must attend a meeting with the trustee assigned to your case. Your attorney attends this meeting with you. During covid, the meetings are held by phone. Your creditors receive notice of this meeting but rarely attend. The Chapter 7 bankruptcy trustee reviews your paperwork to determine if you have any assets that are not protected and could be used to partially repay your creditors. The Trustee also looks at your income and expenses to see if you have extra income that could be used to repay creditors. In a Chapter 13, the trustee looks at the same issues, but the main focus is on whether you are paying all of your disposable income to the trustee through your plan payment. In either case, your meeting with the Trustee usually lasts ten minutes.

After the trustee meeting, there are deadlines for creditors to act in your case. For instance, if a creditor wants to object to your list of protected (exempt) property, they must do so within 30 days of completion of your creditors meeting. If a creditor wants to object to your discharge claiming you committed fraud, they must do so within 60 days of the first date set for your creditors meeting. After these deadlines have passed, the court in a Chapter 7 will enter the discharge order which is mailed to you and to all of the creditors listed in your bankruptcy case, and your case is closed.

In a Chapter 13 case, the process is similar, except that you will be making your monthly plan payments for 36 to 60 months. The length of the plan depends upon your circumstances and how long you need to catch up on your debts. Once you complete payments under your plan, the court will enter a discharge order. A Chapter 13 plan cannot last longer than 60 months. (During covid, the plan may be extended to 84 months if you can show your income has been affected by the covid pandemic.)

A secured debt means that the lender who provided funds to buy something kept a lien against the thing and, if you stop making the payments, can come and repossess that thing. Sometimes you may give a lender, like a payday lender, a lien against an item that you already owned to secure a new loan. Frequently payday lenders will required you to give them a lien against your television or computer or other electronics and title lenders take a lien against a vehicle. The loan agreement will say if the lender retained a lien or “security interest.”   If the lender repossesses the item for nonpayment and resells it, you may still owe them the difference between what they got at the sale and what you still owed them on the loan. That portion of the loan is unsecured. 

Examples of secured debt: house loan, car loan, property taxes, loans for solar panels or water softeners, payday loans (sometimes), or business loans that you pledged assets for. Occasionally credit cards for furniture stores, jewelry stores, and electronics/appliance stores are secured. But many of these are now Synchony or Citibank cards, and are often not secured debts.

Unsecured debts are incurred without the lender retaining a lien against the thing that you bought or taking a lien against an item you already own. An unsecured lender can’t take any of your assets from you if you stop making payments without first suing you and obtaining a judgment against you in order to collect on their debt.   Even if they obtain a judgment, most things that you own are protected from your unsecured creditors in Texas. (link)

Examples of unsecured debt: most credit cards, medical bills or utility bills, defaulted leases, balances on loans for cars that were repossessed, and loans that required only a signature. 

Some unsecured debts, like recent income taxes, most student loans, or domestic support obligations (child support or alimony) can’t be discharged in a bankruptcy case.

Generally no, as long as your spouse did not sign anything agreeing to pay the debt or to guaranty any of the debt. In Texas, spouses are not liable for each other’s debts simply because they are married but are only liable if:

1. They signed something agreeing to be liable on the debt.  Often landlords and the SBA will require a spouse to guaranty debts of the business. However, just because there is a lease or SBA loan does not mean there is necessarily a guaranty. Check your paperwork.

2. They acted as the express agent of the other spouse – meaning you authorized your spouse to act for you – either by a power of attorney, or by telling the creditor that your spouse could incur debts for you or the company.

3. The debts are for “necessaries” – usually medical care although hospitals rarely try to collect from the other spouse.

4. The debts are for a tort you committed (personal injury, medical malpractice, assault, fraud, etc).

If your spouse knew you were embezzling from a company you are involved in or should have known because you were both spending a lot more money that your paycheck said you made, your spouse may be held liable and neither of you will get a discharge if the company objects.

Your spouse will also be liable if the company owes trust fund payroll taxes and your spouse was an officer or director of the company, had signing authority for the company or could make decisions as to what expenses or debts the corporation would pay.

The fact that your spouse does not have to file bankruptcy with you does not mean that you will not have to provide information about his or her income. You will have to provide paystubs and bank statements, information about your spouse’s assets, and other financial information about your non-filing spouse in your bankruptcy schedules.

1. Child support and alimony are never dischargeable (nor are attorneys fees you are ordered to pay to your ex-spouse under a divorce decree).

2. Student loans will not be discharged unless the debtor files a lawsuit in his bankruptcy case against the lender and convinces the bankruptcy judge that requiring them to repay the debt will constitute an UNDUE hardship. Student loan hardship discharges are rarely granted.

3. Federal income taxes are not dischargeable unless a three part test is met:

      a. The tax return must have been due at least three years before the bankruptcy was filed,

      b. The return must have been filed at least two years before filing for bankruptcy and before the IRS filed a Substitute for Return, and

      c. The taxes must have been assessed for at least 240 days.

4. Trust fund taxes (taxes withheld by an employer from employee wages and sales taxes) are never dischargeable. (link) 

5. Debts incurred through fraud are not dischargeable, but the creditor must file a lawsuit in your bankruptcy case within a specified time period, or the debt will be discharged.

6. If you deliberately injured someone or damaged their property, the debt may not be dischargeable. Again, the creditor must file a lawsuit in your bankruptcy case to prevent the discharge.

7. Debts resulting from a personal injury you caused while operating a motor vehicle, boat or plane while intoxicated are not dischargeable.

If you have any concerns whether a debt might be dischargeable, it is very important that you disclose the circumstances fully to your attorney. The problem may be fixable or the risk may be significantly reduced simply by waiting to file the bankruptcy

Bankruptcies are of public record so if your employer is really nosy, he can probably find out about your case. But you do not have to notify your employer unless you owe him money or you are filing a chapter 13. In a chapter 13, a pay order is issued to your employer so the payments can be deducted from your paycheck before the rest is paid over to you.

Credit reporting companies can report a bankruptcy on your credit report for 10 years. This does NOT mean that you will not be able to obtain credit for 10 years. We frequently hear from clients who got credit card applications within a few months after their bankruptcy discharge and the application says Awe were sorry to hear about your recent bankruptcy.@ Creditors are willing to extend credit because they know you cannot file another Chapter 7 case for 8 years.

Many car and home lenders will not lend to you or will require a high rate of interest within the first year of the bankruptcy discharge. We know are salesmen who can get you into c car almost immediately after your bankruptcy case is closed. We also know mortgage brokers who can get you a market rate mortgage one year after the bankruptcy as long as you pay your debts on time after the bankruptcy.

FHA loans – how long after a foreclosure or bankruptcy?

There is always an option not to file bankruptcy, but bankruptcy may provide protections which are not otherwise available. For instance, if a mortgage company is threatening to foreclose on your home, a Chapter 13 bankruptcy allows you more time to get caught up.

1. Do nothing/ ignore creditors. If the problem you are dealing with is credit card debt or other unsecured debt, there is really little the creditor(s) can do to collect the debt from you. Even if they sue you, they will get a judgment which is simply a piece of paper that says you owe the money. Even if they get a judgment, they still can=t garnish wages in Texas (except for child support, taxes, or student loans). If they file a copy of the judgment in the real property records where you own a home, it may make it difficult (but not impossible) to sell or refinance your house. The main downside of ignoring creditors is that they will harass you at home and work. Most people who file bankruptcy do so not because a creditor is doing something to them in court, they just want peace of mind.

2. Debt consolidation programs. There are services that will try to help you consolidate your debts and reduce your monthly payments. Be VERY careful if you try dealing with one of these companies. Most will take your money and accomplish very little, if anything. I see clients at least once a week who tell me that they were promised payments in one amount, paid the payments for several months, and then the service told them that their payments would have to increase significantly. The only one of these companies I would ever recommend is Consumer Credit Counseling Service. They will tell you at the beginning whether or not they can help you. (I see clients all of the time who tell me that they went to CCCS and they told them they needed to file bankruptcy.)

One thing you should be aware of is that if you are doing a debt consolidation, most of your creditors will report you as being delinquent and/or in collection during the repayment plan. Until you actually complete the repayment plan, you are not helping your credit.    

3. Try to settle directly with creditors – how much depends on how long you have been in default. Will be potential tax consequences.

4. Alternatives for tax debt – if you cannot afford to pay your federal income tax debt, you may (a) qualify for an Offer in Comprise with the IRS, which allows you to settle for less than the total amount you owe or (b) if you can afford to pay over the time left on the statute of limitations, you may be able enter an installment agreement with the IRS.

What is the obligation? Child support, alimony and other domestic support obligations are never dischargeable in bankruptcy. If it is an obligation for property settlement or division or other obligations payable to a spouse, former spouse or child pursuant to a divorce degree or other court order that are not for child support or alimony , then the obligationmay be dischargeable in a chapter 13 but not in a chapter 7. You will make payments to the chapter 13 trustee based on your monthly disposable income for the next 3-5 years and would be able to discharge the balance of that obligation and most other unsecured debts that are not paid off at the end of that period. Although an obligation is designated as property division in a divorce decree, a court may find it is for support and therefore not dischargeable. We would need to review the terms of your divorce decree to provide specific guidance as to whether a specific obligation might be dischargeable in a chapter 13.

You generally cannot be charged with a crime for refusing to pay your credit cards, payday loans, signature loans, medical bills, and other unsecured debts. You also cannot be arrested for breaching a lease or other contract. However, you can be arrested for: 

1. Continuing failure to pay child support or alimony. 

2. Failing to pay taxes, although the IRS usually just files a lien and tries to garnish wages and tax refunds. 

3. Continuing to refuse to surrender a vehicle or other asset that secured a loan that you have stopped paying.

4. Committing a crime – like bank fraud, setting up a Ponzi scheme, other fraud, assaulting someone – and refusing to repay the money. You won’t be arrested for failure to pay, but you will be arrested for the underlying crime. And those debts for the amounts you took are likely to be found non-dischargeable in a bankruptcy.

At the local level, police seem to only arrest someone for fraud when multiple people claim you committed fraud and a lot of money is involved. For example, a pool installation company or construction company that requires people to pay a significant amount down (supposedly to buy materials), and then doesn’t do the work and doesn’t return the money - especially if they continued to accept deposits almost right up until they filed bankruptcy. That makes it pretty clear they never intended to do the work.

When local police and District Attorneys are contacted about fraud claims, they often say that it sounds like a civil matter rather than a criminal matter and you should consider suing the other person. Often they are right – the claim is not really fraud but is a breach of contract for which suing is the proper remedy.  While a crime may have been committed, the police and DA may feel it isn’t worth their time for smaller claims.

Yes. The Texas Constitution restricts the forced sale of a Texas homestead to pay all debts except: Purchase money liens or refinance of such liens, taxes due on the property, mechanics and materialman’s liens (which must comply with statutory law to be enforceable), an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, home equity liens complying with the very detailed requirements of the Constitution, and reverse mortgages. Debts that cannot impose an enforceable lien against your homestead: credit cards, medical bills, signature loans, pay day loans, judgments resulting from lawsuits. This does not stop attorneys from filing abstracts of judgment in the county records, knowing that title companies will want the resulting unenforceable lien released before allowing you to refinance your loan or sell the property.

But Texas law provides a procedure for resolving this problem without paying the debt. We send a letter asking the creditor to provide a release of your homestead (but not any other property) from the lien. If the creditor does not send the signed release within 30 days, then we can file with the county an affidavit that complies with the statute and you can close on your refinanced loan. However, many lenders will send the release in response, which title companies prefer. That release is sent to the title company, which should then be willing close on your refinanced loan.

The fees charged are based upon the complexity of the case. The more complex the case, the higher the fee. All fees charged in a bankruptcy case must be disclosed to the court and are subject to review.

Our fees are not the lowest, but you get what you pay for. Michael Baumer is one of just 65 attorneys in Texas who are board certified in both consumer and business bankruptcy and has served five terms as president of the Austin Bankruptcy Bar Association. Additionally, Michael speaks at numerous seminars each year, educating other attorneys about the correct practice of bankruptcy law. (Click here for a list of Michael's Articles and Presentations)

Be careful about the fee agreement you have with your attorney. By law, the fee agreement for a bankruptcy case must be in writing and should set out what is included and what is not included. Some attorneys offer a lower fee, but charge additional fees for basic work. The result may be that an attorney who advertises a lower fee may actually end up charging more by adding fees as your case progresses. When you come in for your free initial consultation, we will provide you with a copy of our fee agreement that itemizes all fees so that there are no surprises as to what you are being charged.

Bankruptcy is a serious and complicated legal process. When you hire our firm, you are getting our wealth of experience and knowledge regarding bankruptcy to get your case filed correctly from the very beginning.