FAQ

Information here assumes that the client qualifies for bankruptcy relief

How much does bankruptcy cost?
There is no charge for this information and first visit to my law firm. After you read the paper, you will provide some basic information to my staff. This will help us decide if you qualify for bankruptcy, and if so, which of the four basic kinds of bankruptcy would be best to help you.

A fee will then be set for you based on the amount of debt you have, the kind of debt you have, the kind of bankruptcy you need, and bankruptcy problems that appear based on the paperwork you fill out for me. Fees for Chapter 7 typically range from $1,300 to $2,000 (unless you are a business owner), plus court fees and credit reports. Fees for Chapter 13 are set by the bankruptcy court, and typically require a minimum retainer before filing. If you are one of the rare cases (such as where a fraudulent statement has been made in writing to obtain a loan) that require litigation (trial) in bankruptcy court, additional fees will be required of you.

My staff will explain payment options to you, and if you and I agree to file a bankruptcy, you will have to sign a contract and provide a deposit.

Is the initial interview free of charge?
We provide a free one hour initial consultation for consumer bankruptcy clients.
Do you have payment arrangements?

Yes. We require a minimum of $300 down, and a signed contract to pay the rest of our fees, some of which must be paid before bankruptcy is filed.

 

Can I keep everything or will I lose it?
There is no need to fear any loss of your important property or possessions in most cases, because the Texas and federal protections of bankruptcy are so strong and wide ranging. Indeed, it is rare that a client has to surrender any property in bankruptcy, and if you are one of those rare situations, you will be given the option to file Chapter 13 bankruptcy, which allows you to keep all of your property, so long as you meet certain required minimum income and financial ability to pay requirements.

In a chapter 7 case, you may keep your homestead and one car for each licensed driver driving in your home, if you are current (or can quickly become current) on any debt tied to your home or your car on the date you file bankruptcy. If you have debt on your home, your car, or any other personal property which you purchased by financing, you may reaffirm the debt, which means you will keep the item, and continue paying the debt on time, during the bankruptcy and thereafter.

The court will only require that you sign a contract with the bank or finance company called a “Reaffirmation Agreement” and show that you can afford the payments. Once that agreement is signed, you may change your mind and/or void the reaffirmation agreement in writing within 60 days of signing the contract, or before your bankruptcy case is discharged, whichever is later.

Almost all our clients officially “reaffirm” some secured debts on property they own. In my many years of bankruptcy work, no client has ever been refused the right to reaffirm a debt on his home, so long as he/she is current on the debt at the time the bank presents the new contract. So, you should not be concerned if this is the kind of debt you want to reaffirm, and you are current on the debt and can afford to keep making the payments.

Can a bankruptcy help me with a lawsuit?
All clients who qualify for bankruptcy get an immediate federal injunction or “stay” of pending litigation, garnishments, levies, and other collection efforts, so long as you have not filed any other bankruptcies in the last year.
Will I be able to buy a car or house after bankruptcy?
A person with regular income will normally be able to buy a car immediately after Chapter 7 bankruptcy has been completed (about 90 – 100 days), and buy a home using traditional FHA or similar banking two years after filing Chapter 7.

In Chapter 13, you can also buy a home or a car with bankruptcy court permission, showing the Court you can afford the payments and the Chapter 13 payments already required by the Court.

Does my spouse have to file with me?
No. And your bankruptcy does not affect your spouse’s credit, as long as he or she continues to make his or her obligations after the bankruptcy is filed for you.
Should I file Chapter 7 or Chapter 13 bankruptcy?
Clients that qualify under the Bankruptcy Means Test can choose either Chapter. Chapter 7 is for those that need to wipe out unsecured debt, or surrender secured debt on a house or a home without having any deficiencies to pay after the collateral has been sold.

Chapter 13 is for those that need to get caught up on a house payment, or refinance their vehicles, or need a five year payment plan to get current on IRS or child support obligations. In Chapter 13, most unsecured debt is either wiped out, or paid at reduced balances, based on your ability to pay.

Who notifies the creditors and bill collectors?
The court, along with a notice that the bankruptcy stay or injunction is in place that prohibits further collection activity under penalty of contempt. A secured creditor must file a motion and have a hearing in most cases to obtain collateral in a Chapter 7. In a Chapter 13, if the collateral is refinanced, and the payments are made in a confirmed Plan, the secured creditors on a house or a car have no recourse.
Will the bankruptcy stop bill collectors from calling?
Yes. It is a federal injunction, under penalty of contempt to continue collection efforts after bankruptcy without first filing a motion, and such a motion is rare, and only heard in a secured creditor’s case. Once a contract is signed, you can refer all creditor calls to our office.
Can I use bankruptcy to stop foreclosure on my home or to stop other actions by creditors?
Chapter 13 is the ideal way to stop foreclosure and get caught up on back payments in a three to five year plan, while wiping out other debts in most cases.
Can my employer fire me for filing bankruptcy?
There are serious penalties and sanctions against employers that are shown to have fired someone because of bankruptcy.
Can I go to jail if I file bankruptcy or don't pay my debts?
In most cases, the answer is “No”. However, the failure to pay child support, or willful failure to pay the IRS can result in jail UNLESS you file a Chapter 13 Plan to repay those obligations, BEFORE a warrant is issued.
Will I have to go to court?
All debtors must make an appearance before a bankruptcy trustee (not a judge), and answer simple questions about the documents you filed in your case. A appearance in Court before a judge is extremely rare.
Can I file a bankruptcy for my debts, but not include my assets?
Yes, this is the most common reason for filing bankruptcy. Texas provides a $100,000 blanket protection over a married couple’s personal assets, and an unlimited protection over their homestead as long as the debtors are making their payments.
Can all of my debts be eliminated by a bankruptcy?
No, but most of them can be.  The exceptions are student loan debts, IRS debts that are less than 3 years old, or IRS debts related to a late tax return, child support, alimony, and Texas sales taxes. There are other exceptions related to loans incurred by fraud, and debts that are run up in the 90 days before bankruptcy is filed, and certain criminal matters.
Can I keep any credit cards?
No. In some cases a card that is paid in full will allow you to continue the line of credit, but that varies from card to card and bank to bank.
Can I load up on debt just before the bankruptcy?
No. Debts incurred in the 90 days before bankruptcy is filed, or right after seeing an attorney about bankruptcy relief, can result in the debt being declared non-dischargeable.
Should I do debt consolidation instead?
The problem with debt consolidation is that the IRS requires any bank or creditor that “forgives” or “negotiates down” more than $600 of debt to report that forgiveness as INCOME on a form similar to a 1099, so that you will be shown to have received income that you must pay taxes on.
What If I Don’t Know Who I Owe, Or How Much I Owe?
Our office requires every client to pay $45 for a four credit bureau report that applies specifically to bankruptcies. Any debts not shown on those reports can still be wiped out by providing our office with the name, address, and amount of debt. Usually, medical bills and pay day loans are not on these bankruptcy credit reports.
Who will know about my bankruptcy?
The law does not require newspapers to publish the names of persons filing bankruptcy, but most newspapers do publish those names one time, for those that file in their city. That is why our office will allow clients near Amarillo to file in Lubbock, and those near Lubbock to file in Amarillo so that the names that are published will be in a different city than where they live.

Northern Law Firm

3545 South Georgia
Amarillo, Texas 79109

(806) 374-2266
[email protected]

M-F: 9:00 am – 5:00 pm

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