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My home has been foreclosed or is about to be foreclosed upon and I do not want it back/ want it back, should I file for bankruptcy?
Maybe, depending on the advice of your bankruptcy attorney.
When a home is foreclosed upon in Texas, it must be sold at public auction on the Court house steps. This is true for judicial and non-judicial foreclosures alike. Judicial foreclosures (rare) require an added step of receiving a Judge’s blessing before it is posted. All foreclosure sales occur on the first Tuesday of every month on the Court house steps.
A public auction usually results in a sell that is significantly less than the value of the home versus if it were sold through traditional means. This means that most Debtors who have a home foreclosed will owe what is called a deficiency balance. This balance is the difference between what the home sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor. This amount can often be significant.
In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card. These amounts can be discharged in a Chapter 7 Bankruptcy without repayment presuming the Debtor qualifies for a Chapter 7 case. This amount can be discharged in a Chapter 13 Bankruptcy as well. Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the foreclosed home may receive some distribution on their claim in a Chapter 13 Bankruptcy.
My vehicle was repossessed, and I do not want it back, should I file for bankruptcy?
Maybe, depending on the advice of your bankruptcy attorney.
When a vehicle is repossessed and sold in Texas, it must be sold at public auction. A public auction usually results in a sale that is significantly less than the value of the vehicle if sold through a dealership or private sale.
This means that most Debtors who have a vehicle repossessed will owe what is called a deficiency balance. This balance is the difference between what the car sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor. This amount can often be significant. In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card.
These amounts can be discharged in a Chapter 7 Bankruptcy without repayment, presuming the Debtor qualifies for a Chapter 7 case. A car repossession deficiency balance, because it can be so high and burdensome to repay, is a common reason for filing Chapter 7 Bankruptcy.
This amount can also be discharged in a Chapter 13 Bankruptcy . Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the repossessed vehicle may receive some distribution on their claim in a Chapter 13 Bankruptcy. For a more detailed analysis of your situation, please contact our office and one of our attorneys can meet with you and discuss your options relating to a repossessed vehicle and any other credit issues that you may have. From there we can help you formulate the game plan that best fits your needs.
My Vehicle was repossessed can bankruptcy help me get it back?
Yes.
A Chapter 13 Bankruptcy can even help you retrieve a vehicle from a Creditor who has already repossessed your vehicle.
In order to retrieve and keep your vehicle through a Chapter 13 Bankruptcy you will need sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%. Further, the Chapter 13 Trustee, the person who collects and disburses your payments to creditors, charges a fee set by the Court at 10% of each one of your payments. This effectively makes the interest rate around 15% on the outstanding principal balance.
Further, a Chapter 13 plan can require payments on other debts, i.e. IRS, Child Support, Homes, Unsecured Creditors etc. It may be that your plan would require payments in addition to supporting the principal and interest due on your vehicle. For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what options you have to retrieve and retain your vehicle. Time is of the essence when filing to retrieve a vehicle. Once the vehicle has gone to auction and sold and a Bankruptcy has not been filed before hand a Bankruptcy will not help you retrieve the vehicle.
What happens to my student loans in Bankruptcy?
When a Debtor files for Bankruptcy the Automatic Stay of 11 U.S.C. 362 goes into effect instantaneously without further action of the Court. The Automatic Stay is an injunction that is automatically entered by the Court upon the commencement of a Bankruptcy Proceeding. The Automatic Stay disallows any further collection attempts against you that do not go through the Bankruptcy Court first. This means that all collection actions must stop including the collection of Student Loans through garnishment, lawsuits, voluntary payments, etc.
In a Chapter 13 Bankruptcy the Automatic stay lasts through the duration of your case. A Chapter 13 Bankruptcy lasts between 3-5 years. During this time, you are not required to pay on your Student Loan, and you are not able to be sued, garnished, levied, etc. as a result of the delinquency on your student loan. Most student loans are a non-dischargeable debt. While you are not required to pay on the student loans during the pendency of your case they will continue to accrue interest during the course of the case, and you will owe more upon conclusion of the bankruptcy than you did at the beginning due to the accrued interest. Often a Chapter 13 buys a Debtor the time necessary to plan to repay the student loans while discharging certain unsecured debt to free up capital to be able to repay Student Loans upon completion of the Chapter 13. Upon completion, you would reach out to the Student Loan creditor and make arrangements to resume regular payments on the debt.
Can I get rid of my tax debt in a Chapter 7 bankruptcy?
Maybe.
Tax debt can be very crippling. The IRS is often aggressive about collecting their debt, employing the use of liens and bank account garnishments to take what they believe is owed to them.
Some tax debt, luckily, is dischargeable in a Chapter 7 Bankruptcy.
First and foremost, your tax return MUST have been filed timely in order for it to be dischargeable. If you filed your return late, the debt is not dischargeable. If you timely filed for an extension, and then timely filed your return within the time allotted pursuant to that extension, your return is considered timely filed.
Secondly, to discharge the tax debt, the tax return must have been originally due at least three years prior to your bankruptcy filing date. For example, if you owe taxes for tax year 2015, that return would have been originally due April of 2016. Thus, you must file after April of 2019 in order to discharge your 2015 tax debt.
These are the two main obstacles to discharging your tax debt. There are a few other nuances, but your bankruptcy attorney can guide you through those to make sure your tax debt is dischargeable.
Can I purchase a vehicle while in a Chapter 13 Bankruptcy?
Yes, it is often possible to purchase a vehicle while you are in a Chapter 13 Bankruptcy. In order to purchase a vehicle, it is necessary to get the Court’s permission first. There are a few things that you will need to do in order to receive the Court’s Approval.
1). The Court will not grant permission to purchase any type of luxury vehicle, i.e. Mercedes, BMW, Lexus, Etc. The Court sets limits on the amount that can be financed. This limit is $21,000.00. The Court sets limits on the amount of the monthly payment. This limit is $500.00 per month. The Court sets limits on the amount you can pay in interest on the loan. This limit is 21%.
2). Once you have picked out a vehicle that fits the above parameters, then you will need to approach the dealership about the vehicle that you are interested in. You will need to work out terms that fit within the above Court restraints. You will need the dealership to provide you with a proposed sales contract. You CANNOT sign a contract for purchase until the contract is approved by the Court.
Do I have to give up my home in Chapter 13 Bankruptcy?
The simple answer here is, no. In fact, most people file a Chapter 13 Bankruptcy in order to keep their home and save it from foreclosure. If you are current on your mortgage payments, the Chapter 13 typically has no effect on your home. You simply continue to make the mortgage payments directly to the Mortgage company. If you are behind on your home when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:
Chapter 13 Bankruptcy is a repayment and reorganization plan. The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.
In order to keep your home through a Chapter 13 Bankruptcy, you will need to be able to make your regular monthly mortgage payment in addition to repaying any arrearage owed to the mortgage company over a 36-60 month period. Our District, The Northern District of Texas, utilizes the “Conduit Program”. This simply means that your regular principal and interest payments are repaid through your Bankruptcy Payment rather than directly by you to the mortgage company.
Do I have to give up my vehicle in a Chapter 13 Bankruptcy?
The simple answer here is, no. If you are current on your car payments, the Chapter 13 typically has no effect on your car. You simply continue to make your car payments directly to your car lender. If you are behind on your car when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:
Chapter 13 Bankruptcy is a repayment and reorganization plan. The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.
In order to keep your vehicle through a Chapter 13 Bankruptcy you will need to be able to at minimum have sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%. Further, the Chapter 13 Trustee the person who collects and disburses your payments to creditors, charges a fee set by the Court of 10% of each one of your payments. This effectively makes the interest rate around 15% on the outstanding principal balance.
Do I lose my tax refund in a Chapter 13 Bankruptcy?
The court allows a Debtor in a Chapter 13 Bankruptcy to keep $2,000.00 of any tax refund with no questions asked. The Court and Trustee’s often allow a Debtor to retain even more than the Court provided $2,000.00 due to credits such as the Earned Income Credit and certain other tax credits and exemptions. Finally, if a Debtor has unexpected expenses, home repairs, vehicle repairs, medical bills, etc. that are outside of the constraints of what a normal budget can provide for the Court will often allow additional funds to be kept often times the full amount of the refund.
The Process for Tax Returns and Refunds in a Chapter 13 Bankruptcy:
1). Prepare and file your tax return with the IRS through the normal manner with which you file a return.
2). Receipt of your tax refund. Upon receipt you may spend up to the $2,000.00 allowed by the Court until you hear further from your case trustee/ attorney.
3). Your Attorney will provide a copy of your tax return to your case trustee. Upon receipt your case trustee will review your tax return and send a letter to you and your attorney stating what if anything they believe is owed to the Trustee from your tax refund.
Combating a Deficiency Balance on a Repossessed Car
Behind on your car payment? You’re not alone. A record number of Americans are behind on their auto loan payments. This is a somewhat unsurprising fact, as lower income individuals are more frequently able to obtain financing on cars due to what seems to be an increase in predatory and sub prime lenders nationwide.
If you find yourself behind on car payments, and have your car repossessed, you will be on the hook for the “deficiency balance” which is the difference of the amount the car sells for at auction and the amount owed on the vehicle. For instance, if your 2010 Toyota Camry sells at auction for $4,000, but you owed $14,000.00 to the lender, the lender can sue you for the $10,000.00 deficiency balance, plus costs and attorney fees. This applies even if you voluntarily surrendered your vehicle.
For those who are already unable to make their car payment, a judgement of this amount is almost impossible to pay. The lender can take money out of your bank account to satisfy the judgement, which can put the debtor in a very dangerous position of being unable to pay rent or their mortgage.
From our office in Arlington, we serve clients throughout Tarrant County, Dallas County, Parker County, Denton County, Wise County, Dallas, Fort Worth, Irving, Grand Prairie, Bedford, Keller, Euless, Richland Hills, North Richland Hills, Mansfield, Coppell, Kennedale, Las Colinas, Burleson, Azle, Saginaw, Haltom City, Watauga, Southlake, Benbrook, Colleyville, Grapevine, Crowley, Aledo, Roanoke, Trophy Club, Carrollton, Farmers Branch, Richardson, and Hurst, as well as other communities across North Texas.
Results listed are not a guarantee or indication of future case results.
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