New bankruptcy laws - anyone with any experience ?

Discussion in 'Economics' started by cicsman, Oct 17, 2006.

  1. cicsman


    Hello all.

    Due to a series of catastrophic events I find myself in a position where I am considering filing for bankruptcy. This is not a decision I have taken lightly but I am at my wits end and just can't see any other way out of my situation.

    I live in Texas and have limited assets - a small amount of savings, a little in a trading acount, 2 cars paid off. I am not a house owner and am currently not working (although I am actively seeking work).

    My wife is working but her income only covers the rent. We are currently drawing on our savings each month.

    My assets are minor in comparison to a large court judgement that has been awarded against me.

    I would like to hear from anyone who has any experience of the new bankruptcy laws in any way (even third hand).

    I moved to Texas 6 months ago and I'm unsure of the best way to find a competent local bankruptcy attorney (i.e. I don't want to just pick someone in the phonebook).

    I read that Texas will allow me to file as an individual without involving my wife. I'm not sure how this works in practice.

    Any help anyone can give me while I try and navigate through this minefield will be much appreciated.

    I'll happily provide updates of my progress if anyone is interested.

    Many thanks in advance.
  2. Sorry to hear of your misfortune. My understanding of the new bankruptcy laws is that if your income is over a certain level you cannot file for bankruptcy. Although that may not affect you, it may affect your spouse. I'm just referring to what I remembered reading, here is a comprehensive breakdown on the new laws, best of luck.
  3. balda


    No experience here so my advice might not be a good one.
    Even after a judgement How are they able to collect?
    Close your Bank and brokerage account for a wile. You are unemployed. How could they possibly collect? If you stop paying, it is not legal for them to update your credit file without any activity. otherwise you can counter sue. and after 7 years it will go off from your credit file.

    But if you are employed they can garnish your wages.
  4. Going off distant memory, but isn't Texas on of the few states that won't allow creditors to take your house away? That and FL I believe. I live CO though. Sorry for your mishap. I am sure if you spend your time on Google you will get educated to some degree.
  5. katesdp


    Sell off the 2 cars.

  6. Get a Job, contact the Judgment Creditor and work out payments, keep the cars.

    You will not be sorry and you will be able to NOT live like a second-class citizen this way.

    You might be able to settle your judgement for a discount later, when you can get a lump sum together, maybe even at a discount...

    A paid Judgment on your credit file is not nearly as bad as a BK...

    Don't worry about your savings ...thats why you had them. When you get a job, all this will become clearer. Just now you have too much time on your hands...

    Just forget the BK idea...You can get out of all of this for less and perhaps painlessly. Both of you are able to work and your are renters....The judgement can be worked out...or just let them's their choice. Either way go on with your life and in a few years you will see that my advice is the best. Bankruptcy now does not make sense for you and if you are to go that route, it better be for more dollars than you are explaining...

    Michael B.
  7. cicsman


    Thanks for all the responses so far.

    Dandxq: Apparently Texas does have homestead laws that can help protect ones property. However, as I didn't have the foresight to buy any property the issue is unfortunately moot.

    Katesdp : I don't want to sell the 2 cars as they are both 10+ years old and worth little and we need them to drive to work (not much public transport in Texas).

    ElectricSavant : that is good advice and I am persuing the possibility of paying by some sort of an installment plan.

    However based on my recent experience with the judgement creditor I am not confident that this will be acceptable to them and they will demand payment (they have been pretty intransigent so far).

    But you you can't get blood out of a stone and on that premise I'm working on a backup plan (i.e. the BK).

    I should add though that BK really is my last resort if all else fails. Never having been in a situation like this before it's all a learning experience (not one I would wish on anyone else).
  8. Start here.

  9. reg


    I think the best thing to do at this point is to consult with 3 or 4 bankruptcy lawyers in your area. Most of the BK lawyers in my neck of the woods offer a free initial consultation, and I'm sure this is the same in the area you're in. This way you will get accurate info and at the same time get a feel for which lawyer you are most comfortable with.
    I understand that a lot of lawyers have given up representing clients in BK cases because of the large amount of paperwork involved under the new laws. Those still in the business tend to charge a lot more because of this.
    Credit counseling with one of those non-profit organizations offering this type of service could be an option for you - the catch is that this will still show up negatively in your credit report.
    Hope this helps and I wish you the best.
  10. Actually it's just as bad or worse. It stays on for 10 years when a BK stays on for 7 years. With a fresh BK, your credit score will be much better than with a paid judgement. Also, the BK will erase the previously negative entries that lead to the judgement, a paid judgement leaves everything on.

    To the poster:

    This is sure advice, I actually originally thought it was not possible but recently watched someone do it who is in nowhere near your position. The guy actually has a bit of wealth but does it to play the system.

    Transfer all your assets out of your and your wife's name. As long as your income does not show any real potential to pay bills, you will be able to file Chapter 7. They use a formula to see whether any income in excess of your immediate bills has potential over 20 years to repay most of the debt. Yes, they want to make an indentured servant out of you.

    Dont fall for the "non-profit" credit counseling. They serve the creditors NOT the debtors. There is more than enough info on the web about the scams almost each one of these orgs runs. Ameridebt is currently subject of a class action lawsuit.

    Do the BK, it's the American way. The rich do it & the big corps do it with no negative stigma while robbing millions of regular folk. Why is it that the average Joe Shmoe has to deal with a huge negative stigma when doing it for the right reasons?


    P.S. Watch out for BK lawyers, they are selfish inconsiderate bottom feeders. You can do the BK yourself for a fraction of the cost. It takes time and research but it's worth it. Courts look down on BK lawyers for the regular folk, for good reason.
    #10     Oct 17, 2006