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Recent Blog Posts
Can Bankruptcy Halt IRS Tax Levies?
Facing IRS threats to seize assets or garnish wages over unpaid taxes strikes fear for many taxpayers. While most creditors halt collection efforts after bankruptcy filings, some wonder whether the IRS plays by the same rules. A Texas bankruptcy lawyer can help you determine how automatic stay impacts IRS collection tactics.
Halting IRS Property Seizures
Upon filing either Chapter 7 or Chapter 13 bankruptcy, an automatic stay immediately pauses most collection activities against debtors. This includes preventing the IRS from confiscating and liquidating property to satisfy alleged tax debts. As your bankruptcy case proceeds, any prior notices or intentions to levy property convert to temporary restraints. The stay protection also requires the IRS to halt auction sales on properties already seized pre-bankruptcy. It must return anything improperly taken after your filing date. This gives you critical breathing room to negotiate IRS repayment terms through bankruptcy.
Should You Short Sell or Declare Bankruptcy?
When debts snowball beyond control, two common paths can provide a fresh financial start—selling property at fair market value using short sales or pursuing bankruptcy to legally liquidate assets and discharge balances. How do you determine which route best fits your unique financial scenario? Depending on your situation, a Texas lawyer can help you determine which path may be ideal for you.
When Home Values Drop But Mortgages Remain High
It is not uncommon for people to end up owing more on their home loans than their houses' worth. If you are underwater on your mortgage but making payments has become a significant struggle, a short sale could give you a way out without completely starting your finances over.
How Short Sales Help
A short sale allows you and the lender to mutually agree to sell the home at fair market value, even if it does not cover what you still owe. The lender takes a loss on the loan but gets something. You also get debt relief because, in most short sales, the lender agrees to forgive the remaining mortgage balance not paid off by the sale. This takes the crushing weight off your shoulders.
Filing for Bankruptcy as a Small Business Owner
As a small business owner, facing severe financial struggles can feel overwhelming and stressful. You may reach a breaking point where bankruptcy starts to seem like the only way out from crippling debt obligations and creditor threats. Filing can provide temporary relief and protection. However, bankruptcy is not a cure-all solution and carries significant downsides as well.
Carefully evaluating both the potential benefits and drawbacks and considering all alternative options first enables you to make the most informed choice for your business. A Texas lawyer can help you weigh the decision and help you.
The Financial Benefits of Filing for Bankruptcy
Filing for bankruptcy can provide financial relief for small business owners who are shouldering overwhelming company debt. It gives you time to reorganize your finances, catch up on debt, and create a plan to start paying it down going forward. Chapter 11 bankruptcy allows you to continue operating your business under the protection of an “automatic stay,” so you do not have to worry about creditors seizing assets or filing lawsuits while working to get back on track.
Can You Save Your Assets During Bankruptcy in Texas?
Filing for bankruptcy may seem scary because it requires you to surrender property to pay debts. However, Texas bankruptcy law allows the protection of certain assets through exemptions. Proper pre-bankruptcy planning will enable you to minimize liquidations and lawfully keep more of your wealth. A Texas lawyer can help you follow the proper steps for the best outcome for you.
Texas Offers Generous Exemptions
The key to saving assets in bankruptcy relies on claiming all available exemptions. Exemptions remove eligible property from liquidation during the proceedings so creditors cannot seize and sell the assets. Luckily, Texas legislation provides more generous exemptions compared to most other states.
Can Your Credit Score Ever Recover After Bankruptcy in Texas?
Filing bankruptcy can be hard on your credit, especially right after filing. Your score will drop in the beginning because of all the discharged debt. Luckily, it is possible to rebuild your credit even after bankruptcy with time and effort. A Texas lawyer can help you determine if it is worth it for your specific situation.
Your Score Will Initially Drop
Expect your credit score to take a big hit after your Texas bankruptcy case is filed. Unpaid debts being discharged and accounts closed will drag down key factors in your score, like payment history and credit utilization ratio. A 100+ point drop is common.
Negative Info Stays on Your Report
Chapter 7 bankruptcy can be reported for 10 years on your credit file. Meanwhile, a Chapter 13 bankruptcy can be reported for 7 years. The bankruptcy status will weigh on your score during this time. Inaccurate information should be disputed with the credit bureaus right away.
Going Through with a Short Sale When Facing Bankruptcy in Texas
If you are struggling with making mortgage payments and considering bankruptcy, a short sale of your home can be a favorable option. A Texas lawyer can help you determine how you can properly have a short sale for your situation.
Make Sure You Qualify for a Short Sale
You must have sufficient equity in the home and valid financial hardship to convince the lender to allow a short sale. Hardship examples include job loss, divorce, unaffordable mortgage rate resets, or heavy medical debts. The lender will typically require a current appraisal showing you are underwater.
Gather All Required Documentation
Lenders will request extensive financial records from you, such as tax returns, bank statements, income documentation, hardship evidence, and past-due mortgage notices. Organize everything thoroughly. Missing paperwork can torpedo the short sale approval.
What Are My Options When Facing a Debt Collection Lawsuit?
Being served with a lawsuit from a debt collector can be alarming. However, it does not necessarily mean you are out of options. There are different ways a Texas lawyer can respond when faced with debt litigation.
Evaluate the Claims in the Lawsuit
Read the lawsuit paperwork carefully. Do you recognize the debt being claimed? Is the amount accurate? Is it still within the statute of limitations? Be aware that debts can be bought and sold multiple times, so the plaintiff may not be the original creditor. If you dispute the main details of the lawsuit, make sure to contact a lawyer about possible defenses.
Negotiate Directly if Appropriate
If you do not contest the validity or amount of the debt, you may be able to negotiate directly with the plaintiff or their attorney. They may agree to a payment plan or lump sum settlement for less than the amount owed. Get any deal in writing before paying or admitting liability. However, be cautious about negotiating without guidance.
The Potential Benefits of Declaring Bankruptcy
Filing for bankruptcy is a major decision with long-term consequences. However, for some individuals facing extreme financial distress, it can provide much-needed relief and a chance to rebuild. When weighed carefully, there are scenarios where the benefits of bankruptcy outweigh the drawbacks. A Texas lawyer can help you decide if bankruptcy is in your best interest.
Gain Immediate Protection from Creditor Harassment
Once you file, you receive an automatic stay that legally forces creditors to stop all collection efforts immediately. You will no longer have to worry about threatening calls or lawsuits. This period lets you focus on getting back on your feet financially.
Pause Foreclosures and Wage Garnishments
Along with halting collections, filing stops imminent foreclosures, repossessions, utility shut-offs, and court-ordered wage garnishments in their tracks. Your assets and income are shielded so you can work toward recovery.
Can Bankruptcy Help You Avoid Foreclosure in Texas?
Facing home foreclosure can be emotionally and financially devastating. If you have fallen behind on mortgage payments, you may be wondering - can filing for bankruptcy stop the foreclosure process and let you keep your home? A Texas lawyer could likely provide some ways to keep you in your home, depending on your specific circumstances.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to restructure debts like mortgage arrears over three to five years. You will make monthly payments to a trustee who disperses payment to creditors. A Chapter 13 bankruptcy will halt a foreclosure while you get caught up on payments through your repayment plan. But staying current on the plan is essential. If you default, the lender can resume foreclosure proceedings.
Type of Texas Bankruptcy If You Do Not Want to Lose Property
Bankruptcy can seem like a daunting thing even to consider. However, there are some situations in which it would be best to apply for bankruptcy so you can move on with your life. Thankfully, there are better options than others if you want to make sure you keep your assets. A Texas lawyer can ensure you are going down the right path with the type of bankruptcy.
Chapter 13 Allows Keeping Property By Repaying Debts
If you face overwhelming debts but want to keep your home and other assets, Chapter 13 bankruptcy is usually the best option. Unlike Chapter 7, which requires liquidating non-exempt property, Chapter 13 allows you to keep your assets under a repayment plan.
Benefits of Chapter 13 in Texas
A major benefit of filing Chapter 13 bankruptcy in Texas is the state’s very generous exemptions that allow for the protection of substantial assets from creditors. For example, Texas has a homestead exemption allowing you to shield up to 10 acres of home equity in urban areas or up to 100 acres in rural areas.
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