Frequently Asked Questions
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WILL BANKRUPTCY STOP WAGE GARNISHMENT?
With the exception of garnishment for child support, yes, bankruptcy will stop a wage garnishment and in most instances “unfreeze” a frozen bank account. If you are experiencing a wage garnishment or frozen account, be sure to bring all documents related to these issues to your consultation.
If you’re looking for relief from debt or assistance with bankruptcy, we are here to help. We offer a confidential consultation to discuss your personal situation. Please call 281-847-4345 for immediate assistance or use the form below to send us a message.
CAN I GO TO JAIL IF I DON’T PAY MY DEBTS?
WILL MY UTILITIES BE TURNED OFF?
IS IT IMMORAL TO FILE BANKRUPTCY? ISN’T IT ONLY “DEADBEATS” WHO FILE?
It is NOT immoral to file bankruptcy. The laws are in place to give honest people who have fallen on hard times an opportunity to get a fresh start. My clients are not “deadbeats”. They are everyday people who have suffered a job loss, gone through a divorce, or have been overcome by medical bills. You are who you are. You are not who you owe.
BUT DON’T I NEED GOOD CREDIT TO LIVE?
Think about it: other than the purchase of a house or a car, there really is no need for credit. In some instances, filing bankruptcy improves credit. In all instances, your credit will slowly improve after the bankruptcy is complete. If you are worried about no longer having access to credit, I will discuss this issue with you at your consultation.
WHAT HAPPENS TO PEOPLE WHO CO-SIGNED MY DEBTS?
If you file bankruptcy, in most instances, anyone who cosigned for you will become solely liable on the debt.
CAN’T I JUST MAKE SMALL PAYMENTS ON MY CREDIT CARDS AND EVENTUALLY CATCH UP?
You could try, but it is unlikely that you will ever pay off your credit cards in full. If you have $15,000 in credit card debt, with an average interest rate of 17% and pay $300 per month, it will take you 7 years and 4 months to pay off the debt, and you will have paid over $11,000 in interest. If you’ve fallen behind on your cards, and your average interest rate is 27%, it would take you approximately 12.5 years to pay off the debt at $350 per month!
IF I FILED BEFORE, MAY I FILE AGAIN?
Most likely. The real issue is whether you will get a discharge of your debts. If you filed previously, it’s very important to inform your attorney of any previous filings.
BANKRUPTCY - WHAT ABOUT STUDENT LOANS?
In most instances, student loans cannot be wiped out through bankruptcy. There are some exceptions however. Be sure to discuss your student loan with your attorney.
WHAT IF I AM MARRIED?
If you are married, you have the option of filing with or without your spouse. If you have a joint debt with your spouse and you file without your spouse, your spouse will become solely liable for that particular debt.
HOW DO I GET A COPY MY CREDIT REPORT?
There are many places online to get your credit report. Every consumer in the United States is now entitled to receive a copy of his or credit report, for free, once each year from each of the major reporting bureaus (Equifax, Experian and Transunion). Click Annualcreditreport.comto check your credit rating, but be sure NOT to sign up for credit monitoring if you don’t want it.
WOULDN'T IT BE CHEAPER TO WORK WITH A DEBT COUNSELOR, PARAPROFESSIONAL OR CONSOLIDATION SERVICE?
Probably, but what you save in money up front could end up costing you much much more later on. See above to read about why we think you should not work with a paraprofessional to file bankruptcy. If you choose to have your debts negotiated for you, keep in mind that a debt counselor or consolidation service is not required by law to act in your best interest, whereas an attorney must act in your best interests.
Many debt counselors and consolidation services have hidden fees and do not necessarily act in your best interests. Some of these companies are legitimate and do a good job, but be very careful and read the fine print before you hire them.
I HAVE A SIMPLE CASE - CAN I DO IT BY MYSELF OR USE A PETITION PREPARER OR PARALEGAL?
There is no such thing as a “simple” bankruptcy, especially under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Your particular set of circumstances (what you own, what you earn and spend, who you owe, what caused you to fall behind, etc.) can significantly affect your bankruptcy case.
Only a skilled bankruptcy attorney can interview you and help you apply the facts of your life to the bankruptcy laws. Paralegals and preparers cannot give you legal advice or go to court with you. Paralegals and preparers cannot fight a creditor for you if that creditor contests your case in some manner. Most importantly, paralegals and petition preparers do not have to answer to any regulatory entity, whereas bankruptcy lawyers must comply with the ethical obligations and competency requirements of their state bar.
Any mistake a paralegal or petition preparer makes, could end up costing you thousands of dollars or the loss of property. It is also very unlikely that you would have any rights against them if they do make a mistake. You would likely save some money early, only to learn that you lost much, much more later on.
DO I HAVE TO GO TO BANKRUPTCY COURT?
Technically, yes, as you have to go to the Federal courthouse. However, it is exceptionally unlikely that you will have to appear before a judge. 99% of my chapter 7 clients go to the courthouse once, for what’s called a Meeting of Creditors.
ARE THERE ALTERNATIVES TO FILING BANKRUPTCY?
There may be, especially if the amount of unsecured debt you have is not overwhelming. Easily half the people who meet with me do not need to hire me for a bankruptcy in Houston. Many families have never done a budget, and I am able to help them find ways to cut expenses and get back on their feet without use of professional help. Other folks choose to have me negotiate their debts for them. Whatever their choice, I offer a one hour initial consultation to assess your situation and give you sound advice. See also our page on alternatives to bankruptcy.
WILL BANKRUPTCY APPEAR ON MY CREDIT REPORT?
Yes. A Chapter 7 Bankruptcy will stay on your credit report for a period of 10 years. A Chapter 13 Bankruptcy will stay on your credit report for 7 years.
IS IT POSSIBLE TO GET MY CREDIT RATING BACK AFTER MY CASE IS OVER?
Yes. We will discuss some debt relief strategies with you at your consultation, as well as after you receive a discharge
WILL SOMEONE COME INTO MY HOME TO INSPECT MY PROPERTY?
If you are behind on a mortgage, the mortgage company has the right to inspect the outside of the property. Otherwise, creditors do not generally inspect the inside of your house.
ARE BANKRUPTCIES PUBLIC RECORDS? (WHO HAS ACCESS TO THEM? ARE THEY PUBLISHED IN A NEWSPAPER?)
Yes, filing a bankruptcy is public record. Anyone who subscribes to the court’s website has access to those records. It is not generally published in the regular newspaper, but sometimes they will appear in legal periodicals. Basically, someone would need to be looking for your case to find you. They will not see it on the front page of the weekly newspaper.
AFTER I FILE FOR BANKRUPTCY, WHO NOTIFIES THE CREDITORS?
Within a day of your case filing, my firm will contact creditors who are giving you a particularly difficult time. Soon after filing (usually within a few days), the bankruptcy court clerk mails a notice to all of your creditors. Once your creditors receive the notice, they are not allowed to harass you anymore.
CAN BANKRUPTCY STOP A FORECLOSURE OR REPOSSESSION?
In most instances, yes. If you have had 2 or more bankruptcies dismissed in the one year prior to a new filing, a foreclosure or repossession likely will not be stopped.
Filing chapter 7 bankruptcy may not be your best option if you are hoping to stop a foreclosure or repossession.
Please see our Chapter 13 information page for more information regarding choosing chapter 13 as it will likely be better for you if you are trying to stop a foreclosure or repossession.
MEANS TESTING EXPLAINED
Means testing is one of the largest changes that came about when the bankruptcy laws changed in 2005. Means testing is the government’s attempt to create an objective test to determine a family’s ability to repay its debts. Means testing does not apply to you if most of your debts are related to a business. Whether you “pass” or “fail” the means test is significant. “Pass” and “fail” are in quotes because nobody truly passes or fails. The means test simply provides data. If you “pass” and the data is good, your bankruptcy is much easier. If you “fail” and the data is bad, bankruptcy could be significantly complicated but could still be an option. There are plenty of websites that allow you to punch in data to do your own means test. Most of these online tests don’t work all that well. Since the data provided need to be interpreted by a bankruptcy attorney, don’t let your online means test get you down or give you false hope. In most instances, our firm will do a means test for you face to face, for free. We’ll help you interpret that data on the spot so you don’t have to wonder about what it means.
Means testing and median income
Means testing first examines a family’s gross income in the six months prior to filing. Gross income is all the income received before things like taxes and health insurance come out. It includes nearly every imaginable source of income such as baby-sitting the neighbors’ kids or selling things on eBay. It does not include money received from Social Security but it does include money received for unemployment or teacher’s retirement.
Once all the income from the six months prior to a bankruptcy filing is gathered up, it is doubled for the purpose of considering it on an annual basis. That annual number is then compared to the median income based on family size. Median income figures usually change a couple of times a year and can be found here. If the annual number is less than the median income based on family size, the person(s) automatically “passes” the means test. If that number is over the median income based on family size, then the person(s) is subject to means testing.
Why it makes sense to see an attorney regarding means testing
There are many many variables when it comes to means testing. Only a bankruptcy attorney with deep knowledge of the process can analyze the situation correctly. There could be questions regarding family size such as whether an elderly parent or 24 year old child is considered part of a household. There could be questions regarding whether something is income such as a withdrawal of an IRA or the sale of a vehicle. The answers to these questions are never the same because they depend on many other factors that a lawyer would learn from you once you sat down face to face.
An experienced bankruptcy lawyer can see ways to minimize the harm of a “bad” means test that a lay person could not or that an inexperienced bankruptcy attorney would never recognize. If you try to analyze your means test data on your own, you do it at your own risk. We would be happy to sit down with you and give you our best advice as to what your data means to you.