BANKRUPTCY The Gordon Law Firm, P.C. Stephen H. Gordon - Attorney at Law San Antonio, Texas 78201

If you find yourself in a financial crisis, there may be a way to get help. Filing bankruptcy may allow you to get out of debt and get a fresh start on life. Of course, no one should take this step lightly, and it should only be used as a last resort, but sometimes there is no other way out.

There are organizations dedicated to helping you avoid this step, and they will help you work with your creditors to reduce your debt load and avoid a total default. Sometimes a creditor will agree to let you skip a payment or two, or reduce your interest rate so that you can get back up on your feet. Unfortunately, this relief is still not enough for some consumers and they find that they continue to get behind each month. If that is where you find yourself, you may want to consider filing for bankruptcy.

If you are an average consumer, there are two basic types of bankruptcy you could file. The first is called "Chapter 7" and usually results in wiping out or "discharging" all of your unsecured debt (i.e. credit cards). In addition, you generally get to keep all of your standard household possessions and your homestead property, because they are "exempt" from seizure under Texas law. There are certain exceptions, such as if your credit card agreement specifically cites certain property that is "secured".

The other general type of bankruptcy from average consumers is called "Chapter 13." In this type of bankruptcy you enter into a repayment plan with some or all of your creditors. The plan typically lasts a maximum of 5 years. During this time your interest rates may be reduced or eliminated altogether.

Most people prefer to file under Chapter 7 because it allows them to eliminate much of their debt and truly get a clean start. However, there are some situations in which Chapter 7 cannot fully protect you. One primary example is if you are behind on house or car payments and want to keep them. These types of property are generally "secured", meaning that if you do not make your payments, the creditors have a right to repossess them. This is generally not the case with the "unsecured" items people typically buy with their credit cards. If you are behind in this situation, the only long-term protection may be filing Chapter 13.

Under the Bankruptcy Reform Act of 2005, the U.S. Congress made filing a Chapter 7 much more difficult. They also limited the eligibility of many people who previously did qualify to have their debts liquidated. In addition, a person must now take a bankruptcy counseling course before they file (with certain emergency exceptions), and a credit counseling course before they finish their bankruptcy. A person must also be prepared to turn over the last 2 years tax returns and the last 6 months worth of bank statements to the Trustee assigned to the case.

The court looks at a person’s income very carefully. If their family income is below the median average for the county they live in, they have a good chance of getting their bankruptcy approved. However, if their income is above the median average, their financial situation is analyzed in much more detail using a method called a “means test.” Under this “means test” a certain set of standardized deductions are subtracted from their income, and they have the opportunity to document if they have special needs and expenses beyond the normal. However, these must be backed up with proof of some kind.

Once the bankruptcy papers or "petition" is initially filed, you get immediate protection from creditors as a result of the "automatic stay" that is imposed. During this time creditors cannot make any attempt to collect a debt from you, as you sort out your affairs. This "stay" is temporary, and can be taken away or "lifted" in certain situations, but it generally lasts until your debts are wiped out.

We are a "Debt Relief Agency". We can help you decide if filing bankruptcy is the right solution for you. We can help you organize your financial data, and even pull up a credit report for you to review to make sure we have all the correct information. We can walk you through the process and accompany you to court to explain your situation. We understand that money is tight, and so we offer payment plans to help you get going.

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