Month: October 2019

Filing For Chapter 7 Bankruptcy in Texas? Here are 3 Things You Should Know

Chapter 7 is the most common form of bankruptcy that people apply for in Texas. If you are struggling with repayments on your mounting debt, chapter 7 bankruptcy is often a viable solution to the problem, and can grant you a fresh financial start. However, before you consider filing for Chapter 7 bankruptcy in Texas, here are three important things you should be aware of.

1. Exemptions

Many people are unaware that filing chapter 7 bankruptcy doesn’t automatically imply that they would lose their property. Exemptions exist to provide some degree of protection to the debtors, and allow them a better starting point for regaining their financial well-being. A successful exemption claim can allow you to keep some, if not all, of your property following the conclusion of a bankruptcy case. Both the Federal and State law deal with exemptions. In Texas, it is often better to apply for state exemptions as they are, on a whole, much more lenient to the debtor.

2. Moving to Another Location

For various reasons, people may consider filing for bankruptcy after they have moved to another state or jurisdiction. In Texas, many people do so because of the more favorable exemption laws.

However, there are two important pieces of information you should be aware of; firstly, you must have lived in your current location for at least 91 days before you can file for bankruptcy there. Secondly, you must have lived in the same state as your current jurisdiction for the last 730 days before you are eligible for filing exemptions. This applies to all states, including Texas. If you do not meet these requirements, you have to file for exemptions under either Federal law, or the state you last resided in for a total duration of 821 days or more.

3. Deberry vs. Lowe

The recent court case of Deberry vs. Lowe last year is worth mentioning. After filing for Chapter 7 bankruptcy, Deberry, a Texan resident, successfully claimed an exemption for his home with no objection. Seven months later, the court ordered him to sell the house and he did so likewise. However, he didn’t reinvest the money in another property within six months of sale. The chapter 7 trustee Mr. Lowe, thereafter, filed a lawsuit against Deberry.

However, the 5th Circuit Court of Appeals sided with Deberry in their final decision, allowing him to keep the proceeds of his house sale. In light of this hearing, we can conclude that, in Texas, as long as you owned the property on the date of filing for bankruptcy and successfully claimed an exemption for it with no objection, you can sell it and do whatever you want with the proceeds.

Get Help from a Lawyer

Dealing with the law can be a complicated affair. Hiring a good attorney can save you a lot of headaches as well as vastly improve your chances of having a court decision that is more in your favor. If you located in or near Austin, TX and require an experienced lawyer that specializes in bankruptcy law, then consider the Law Offices of Sean T. Flynn, PLLC. To schedule an appointment, call 512.640.3340 or contact me online.

Why It’s Better to File for Chapter 7 Bankruptcy Before Foreclosure

Imagine this scenario, you missed out on many months of your mortgage payments and now, you are at the risk of losing your property as the lender may move towards foreclosure. Should you file for bankruptcy before or after the foreclosure? Provided that the risk of auction cannot be avoided, filing for Chapter 7 bankruptcy before foreclosure is often better and can bring with it a host of advantages.

Buys You Time The most important advantage of filing for Chapter 7 bankruptcy before foreclosure is that it allows you to buy time. After filing for bankruptcy, the court will issue an automatic stay period, usually a duration of between three to six months. During the stay period, the lender cannot collect debts, nor schedule a foreclosure of your property. You can utilize the stay period to open negotiations with your lender.

Can Help You Save During the stay period, you don’t have to make debt repayments or pay rent because of foreclosure, which allows you to build up your savings. Furthermore, given the current state of the US real estate market, many properties are valued less than what they were mortgaged at. The outstanding amount owed to the lender after the sale of the property is called a “deficiency.” In Texas, lenders have the right to file a deficiency lawsuit after a foreclosure.

Because your mortgage debt is discharged if you file for bankruptcy before foreclosure, once the property is sold, there is no deficiency your lenders can sue you for.

You Don’t Owe Taxes on Forgiven Debt Fortunately, most lenders are not hawkish enough and often forego their right to sue you for a deficiency after foreclosure. However, this still leaves you to contend with the IRS. In their view, the forgiven outstanding debt translates to an income that they can tax. If you are not exempt under the Federal Mortgage Debt Relief Act of 2007, filing for Chapter 7 bankruptcy before foreclosure can save you from acquiring a tax liability.

Allows You a Fresh Start Some debtors may hesitate in filing for Chapter 7 bankruptcy before foreclosure. After all, it can leave them with a bad credit score. But foreclosure can similarly do likewise or worse, while still leaving you with some debt remaining. The harm you suffer from filing bankruptcy is temporary, and it allows you a fresh start to regain your financial health.

Filing for bankruptcy can be a strenuous process, so it is often wise to seek legal help while doing so. At the Law Offices of Sean T. Flynn, PLLC, in Austin, TX, I provide personalized legal service to my clients filing for bankruptcy under Chapter code 7 and 13. With over 8 years of experience in the field, I will assist you in mitigating your financial troubles. To schedule an appointment, call 512.640.3340 or book one directly online.

5 Things You Should Know Before Declaring Bankruptcy on Student Loans

Declaring Bankruptcy on Student Loans

Student loan debt is on the rise across the country as students take in more and more loans to finance their rising tuition fees. In fact, Americans collectively own more than $1.5 trillion in student debt, and the figure is still rising. If you are struggling with managing your student debt, you may wish to file for bankruptcy. However, there are some things you should know before declaring bankruptcy on student loans.

1. Qualifying for Chapter 7 Is Difficult

To file for chapter 7 bankruptcy, you must first make sure you are eligible for it by passing the means test. The income requirements often disqualify many bankruptcy filers from filing under this Chapter.

2. Filing for Bankruptcy Won’t Guarantee a Debt Discharge

Even if you qualify for Chapter 7, you would still have to prove to the court that you are not in the position to pay your student loan debt. You will have to convince the judge that the debt is inflicting extreme hardship on your well-being and that your financial situation is unlikely to change in the near future. As one would expect, cases that win out are quite rare. Filing under Chapter 13 is easier, but it would only reorganize your repayment plans based on your judged ability to pay back the loan.

3. Filing Bankruptcy Is a Stressful Process

It should be stressed that filing for bankruptcy is a lengthy process. Debt discharge can take up to 4 to 6 months under Chapter 7 – that is if you win at court. During the process, you will have to manage finances for the legal fees involved, as well as go through a lengthy list of paperwork. Therefore, seeking the advice of an experienced attorney can help ensure your case is successful. Don’t be discouraged though. While your student loans may not be discharged and the process may be stressful – you may still be able to get some relief. Bankruptcy can eliminate your other debts freeing you up to tackle your student loans or allow you to put them in a reorganization plan.  For some loans, there may even be an income-driven repayment program you can avail yourself of in conjunction with your bankruptcy case.


4. You Can’t Hack Your Way out with a Credit Card

Some clever-mind students may think that they can cheat the system by putting all their student debt on their credit card and then file for its bankruptcy. However, such an attempt would be categorized as fraud. If the court thinks that the attempt was deliberate, expect some negative consequences.

5. It Will Impact Your Financial Health

A completed bankruptcy can linger on your credit report for up to 10 years, impacting your financial health. This may sound discouraging, but not filing for bankruptcy and allowing your debt issue to worsen would also negatively impact your credit score. Discharging your debt allows you to start anew with a clean slate, and many are able to rebuild their financial well-being even before the bankruptcy gets dropped off their report.


Get Legal Help

If you fail to plan, you plan to fail. As mentioned before, filing for bankruptcy is a tiresome process and the court case will not always result in your favor. Therefore, a qualified legal attorney is essential for helping you navigate successfully through the figurative legal labyrinth.

At the Law Offices of Sean T. Flynn, PLLC in Austin, TX, I offer personalized legal assistance for filing under Chapter 7 and Chapter 13 the bankruptcy code. With over 8 years of experience in the profession, you can be sure to obtain a satisfactory resolution in a bankruptcy case. Call + 512-640-3340 or contact me online to schedule an appointment.

5 Steps to Take in Case of a Debt Collection Lawsuit

If you find yourself unlucky enough to be a victim of a collector’s claim, don’t panic! Here are 5 steps to take in case of a debt collection lawsuit.
Steps to Take in Case of a Debt Collection Lawsuit

Being unable to manage one’s debt is stressful enough; the last thing anyone would want is for them to get sued by their creditors. If you find yourself unlucky enough to be in this situation, don’t panic! Take a deep breath and tackle the problem methodically. Here are 5 steps to take in case of a debt collection lawsuit.

1. Respond to the lawsuit

Often, in a state of panic and stress, people will not respond to the lawsuit. Big mistake! By doing so, the default judgment may end up in the collector’s favor. Depending on the state law, the court could order a deduction from your salary for debt repayments, or give the collecting agency some access to your bank account. Thus, responding to the lawsuit is extremely important.

2. Weigh Your Options

Once you have responded, there are many options available to you to help turn the tide in your favor. Challenge the right of the collector to sue you by asking them to provide the necessary documentation. If they are unable to do so, the judge will dismiss the case. Consider asking for proof of the amount owed. This can make things more difficult for the collecting agency as accounts can often change hands multiple times before a lawsuit is filed. Even if this does not result in a case dismissal, the final settlement agreement would likely be of a much lower amount.

3. Point to the Statute of Limitations

The Statute of limitations is a law that states the specific time before a claim can no longer be legally filed. It can vary from state to state. In Texas, the time-span is 4 years for debt collection. In the case of debt collection, the period begins from the last time you were active on the credit account. If your debt is past the statute of limitations, the lawsuit may be liable to be struck out.

4. File for Bankruptcy

In some cases, filing for bankruptcy may be the right option to choose. During the bankruptcy process, your debt collector can’t harass you with collection claims. Filing for bankruptcy can negatively impact your credit score and financial well-being. However, when you are unable to make repayments on your debts, it is often the most viable option on the table, and allows you to start afresh on a clean slate.

5. Hire an Attorney

A qualified legal attorney will advise you better on all the possible options you have on the table to strengthen your defense and improve the chances of winning against the lawsuit. In case your attorney believes that the plaintiff has acted illegally in filing a claim, you won’t even have to pay their legal fees as the court will order the plaintiff to do so instead.

Sean T. Flynn is a veteran legal attorney with over 8 years of experience, specializing in bankruptcy law. If you are in need of a professional personalized legal service, call 512.640.3340 and schedule an appointment directly online.

Bankruptcy Simplified: Chapter 7 vs. Chapter 13

In this article we discuss the main features and differences between the two and whether you should avail Chapter 7 or Chapter 13 for discharging your debt.

If you are ever unlucky enough to get yourself in a situation of unplayable debt then filing for a Chapter 7 or Chapter 13 bankruptcy can be your way of minimizing, or even eliminating, the burden. Many people often get confused between the two, or are unable to decide which one is better for solving their personal debt issues. In this article, we discuss the main features and differences between the two, and whether you should avail Chapter 7 or Chapter 13 for discharging your debt.

What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy deals with the liquidation of non-exempt assets as a means to pay off the debts. It can be filed by both businesses and individuals.  Debt discharge is quick, usually taking around 3 to 6 months in most cases. Chapter 7 is the simplest and most common form of bankruptcy program that people file for.

When to Choose

Eligibility for Chapter 7 debt discharge is restricted to only those debtors with a low enough disposable income. Check to see if you qualify by passing the Chapter 7 means test eligibility threshold. Individuals should choose to file for Chapter 7 if their debt is dischargeable, and if creditors are not legally barred from seizing their assets.

Benefits & Drawbacks

The main benefit of Chapter 7 is that you can quickly eliminate most, if not all, of your debt and get a fresh start. The biggest drawbacks are the risks of you losing your property. Fortunately, such case results are rare in the US, and more so in Texas with its more favorable laws. Another drawback is that it may cause a temporary drop in your credit score.

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy, on the other hand,  deals with the re-organization of your debt in order to make it easier for you to repay it. This Chapter is only available to individuals and the debtor cannot receive a discharge until the completion of the Chapter plan. 

When to Choose

You are only eligible for Chapter 13 bankruptcy if you earn a regular income, and if your debt does not exceed $394,725.00 (unsecured) or $1,184,200.00 (secured). Individuals should choose to file Chapter 13 if their debt isn’t dischargeable under Chapter 7, or the value of their assets is worth more than the available exemptions. Additionally, they can also file it if they just want to make up for past outstanding payments on their mortgage or car loan.

Benefits & Drawbacks

The main benefit is that that none of your assets are sold off to pay off your debt. Another advantage is that debt repayments are determined by what you can afford, and further interest isn’t incurred during the duration of the plan. A drawback is that most, or all of your disposable income will be tied up in repayments and you may temporarily see a decline in your credit score.

Before filing for either a Chapter 7 or Chapter 13 debt discharge, it is always recommended to speak with a legal attorney who can best advise you on the course of action you should take in discharging your debt with minimal losses.  If you are in need of a professional personalized legal service, contact The Law Offices Sean T. Flynn at 512.640.3340 or contact directly online.

Get A Fresh Start

Schedule a time to speak with an expereinced Bankruptcy Attorney today!