A Fresh Start
With Bankruptcy
Man looking at Laptop

A Fresh Start
With Bankruptcy

It Is Essential To Know Your Rights In Bankruptcy

When a bankruptcy is filed, you receive three important protections. To fully understand these protections and how they work, turn to Law Office of Stephen J. Zayler in Lufkin, Texas. Here, Attorney Stephen Zayler uses his vast experience to provide clients with high-quality, personalized bankruptcy representation and information to ensure they are able to make educated decisions about their cases. Read more below about the protections received when you file for bankruptcy.

Protection No. 1: To Be Left Alone

From the moment that the bankruptcy is filed, the automatic stay of the Bankruptcy Code prevents all creditors from making any at­tempts to collect a debt or exert control over the property of the debtor’s bankruptcy estate. Creditors cannot call, write, sue or repossess. Creditors who knowingly violate the automatic stay protection can be held liable for damages.

  • Law change: The automatic stay protection is not always so automatic and may be limited if you have previously filed for bankruptcy before. You will need to discuss this in more detail with attorney Zayler if you have previously filed.

Protection No. 2: The Right To Keep Some Property

The second protection is the right to exempt or protect a sufficient amount of property to maintain a household together. Generally speaking, a person’s homestead, furniture, personal effects, tools of the trade, retirement/Social Security benefits and motor vehi­cles may be claimed as exempt. The exemption of other types of property depends upon your particular situation.

Any property that you wish to claim as exempt and keep, you must continue to pay for it if it has a debt against it. For example, the debts on home mortgages and debts on automobiles are often reaffirmed, and payments continue to be made as if the bankruptcy never occurred. If you are behind some payments, known as “arrearage,” often an agreement may be reached with a creditor to catch up on the payments or a Chapter 13 reorganization plan filed to catch up past due payments. Corporation debtors cannot exempt property.

  • Law change: While the amount and type of property a person may exempt and protect from creditors is still quite reasonable, there have been some important changes that will affect some people. Attorney Zayler can discuss this in more detail if it may cause a problem for you. The amount of any type of property you may exempt or protect is normally based on how much net equity value you have. For most purposes, the formula is: actual fair market value – secured debt = net equity value. Fair market value in bankruptcy is normally a used retail sales price or the cost to replace an item of property with another, “as is,” or in the same condition. Sometimes, fair market value is a liquidation or garage sale price.

Protection No. 3: The Discharge Or Release From Certain Debts

The bankruptcy discharge releases you personally from any further liability from your obligation to pay debts or claims that existed before you filed bankruptcy (prepetition debts). Debts that arise after the filing of your bankruptcy, generally speaking, are not affected by your bankruptcy filing. You should list any and all debts that you owe no matter the amount nor to whom it is owed. Failure to list a debt may mean that you remain liable to pay that debt. Corporation debtors do not receive a discharge. Their assets are sold, and the money is paid to creditors.

Nondischargeable Debts

You should know that there are some debts that cannot be discharged in a bankruptcy. You will still be liable for these debts even after your discharge. A summary of the most common of these follows:

  1. Taxes,  in most instances; especially if a tax lien is filed
  2. Liability for obtaining money, property or services under false pretenses or fraud. The most common example in this category where a debtor has failed to list all of his creditors on a loan application at the time of making a loan or purchase
  3. Use of credit cards for purchases or cash advances just before filing for bankruptcy: If you have any cash advances or have purchased anything of more than $500 value per creditor in the last 90 days, please let attorney Zayler know
  4. Debts not listed in your paperwork unless the creditor had actual knowledge of the bankruptcy proceeding
  5. Fraud, embezzlement, misappropriation in a fiduciary capacity or larceny
  6. Alimony and money due for support and maintenance of a spouse, ex-spouse or child, and in some cases property settlements from a divorce
  7. Willful and malicious injuries
  8. Fines, penalties or forfeitures payable to the government
  9. Educational loans
  10. A judgment arising from driving while intoxicated
  11. Any debt that could have been scheduled in a prior bankruptcy proceeding.

Some of these debts may be discharged in Chapter 13 but not Chapter 7.

Schedule A Free Consultation Now

While bankruptcy may sound confusing and overwhelming, attorney Stephen Zayler is here to make the process easier and less stressful for you. To discuss your case during a free initial consultation, call his office today at 936-755-5002 or contact him online.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.