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November 2011 Archives

What is a “no-asset” Chapter 7 bankruptcy?

A “no-asset” Chapter 7 bankruptcy means a you do not have assets that the bankruptcy trustee can sell to pay your creditors. Let me take a few steps back to answer the question more thoroughly. Basically, whenever you file bankruptcy, you list ALL of your assets. Your assets include your house, car, items in your house, and other tangible items. Your assets may also include some things that are easily forgotten like bank accounts, life insurance, inheritance, and potential lawsuits. A good bankruptcy attorney will give you some type of workbook to help you remember your assets.Take your time when filing this workbook out. Forgetting to list an asset can cause you to lose that asset. Once you have listed all of your assets, your bankruptcy attorney will look at exemptions to determine if your assets are exempt. Exempt assets are protected from your creditors which, in turn, means you get to keep them. Nonexempt assets can be sold by your bankruptcy trustee to pay your creditors. What type of exemptions you qualify for are determined by state law. There are some unusual and very specific rules to determine which state law you have to use to determine exemptions and I am not going to bore you with such a miniscule and technical area of the law today. Bottom line: If you have moved from one state to another state in the last two years, you need to speak to an experienced bankruptcy attorney where you live to determine which state's law you need to look at when determining your exemptions. Since exemptions vary from state to state, some states have very generous exemptions and some states are stricter about which of your assets are protected from creditors. Since I practice bankruptcy in Texas and 98% of the time I use Texas law to determine my client's exemptions, my comments are going to be directly specifically at Texas and Federal exemptions which I am allowed to use in Texas. Under Texas and Federal exemptions, it is really hard to lose an asset in a bankruptcy. The vast majority of the bankruptcies I have filed are “no-asset” Chapter 7 bankruptcies. That means I was able to exemption every asset the individual had so they kept all of their property. Typically, I only work on one to two asset cases a year. That should give you some perspective as to how rare asset Chapter 7 bankruptcies are in Waco, Texas where I practice. If you are concerned about any of your assets, you need to speak to an experienced bankruptcy attorney in your area. But what happens if you have a non-exempt asset? For example, typically under Federal exemptions, you can have approximately $20,000.00 cash on hand or in the bank on the day you file bankruptcy. The vast majority of my clients have considerable less than $20,000.00 in the bank the day I file their bankruptcy. However, for the sake of my example, let's say, you had $23,000.00 in the bank the day I filed your bankruptcy. The Chapter 7 Trustee could technically take the amount over the exemption amount and pay that amount to your creditors. So, you would keep $20,000.00 (the exempt amount) and the trustee would take $3,000.00 (the non-exempt amount) and give that to your creditors. You would not owe your discharged creditors any more money and you still have a successful bankruptcy. While this example may seem extreme, I have worked on a bankruptcy where the individuals had more than $20,000.00 in the bank the day we filed their bankruptcy. Even if you have non-exempt assets that the bankruptcy trustee could sell, the trustee may choose to abandon those assets if the asset is small or difficult to sell. Timeshares are a non-exempt asset I see trustees abandoned frequently. The trustee would have to find a buyer for the timeshare and then make a distribution to creditors. Frequently, trustees will abandon these timeshares rather than search late night commercials to find a timeshare buyer. The non-exempt asset is just not worth enough to justify the administrative cost and effort to sell. Trustees will frequently abandon non-exempt assets if they are worth less than $4,000-$5,000.00. However, you can't count on that. I read an article this weekend about trustees who are taking non-exempt property worth less than $4,000.00. (see http://www.nwitimes.com/news/local/lake/hammond/bankruptcy-debtor-s-downfall-and-trustee-s-boon/article_3f060888-f764-5095-8d6f-012dd33f124d.html). The take home message is that most people who file bankruptcy are worried they will lose something. I hear it all the time—Will I lose my house.... car.... motorcycle.... retirement account? In Texas, you probably won't lose anything of your assets as long as you hire an experienced bankruptcy attorney and you are honest with them. Are you ready to take the next step? Call 254-633-2876 or email me at info@thekehllawfirm.com today for a FREE, no-obligation consultation to explore your options with experienced staff.

Caregivers and Debt

Approximately 1/5 of Americans are providing unpaid care to a family member or friend. The sad fact is that while Americans are living longer, many elderly require help to survive. Assisted living is expensive. Trust me, I was just looking into it. In-home help isn't cheap either. So, most have to turn to family or friends for help. These family and friends typically provide help without pay.But what do caregivers do? Caregivers provide emotional, financial, nursing, social, homemaking, and other services on a daily or intermittent basis. Most family caregivers volunteer their time, without pay, to help with the physical and emotional needs of a loved one. Duties vary and may include providing personal care, feeding, toileting, dressing, bathing, carrying out medical procedures such as suctioning an injured person every hour every day, assisting with activities of daily living, and managing a household. Most caregivers spend an average of 20 hours a week providing care to their loved one even though over half of caregivers have other jobs. Caregivers are extremely important and often overlooked.Since November is National Caregivers Month, I wanted to look at two ways caregivers need help. First, caregivers need to take care of themselves emotional. Caregivers typically give and give and they feel guilty when they take a break. But those breaks are critical for the caregiver's emotional health. It is ok to take time for yourself. Please read this article giving caregivers suggestions on how to care for their emotional well-being. See http://www.womenshealth.gov/publications/our-publications/fact-sheet/caregiver-stress.cfm for some tips on how to deal with caregiver's stress.Second, caregivers also tend to supplement the loved one's income as needed. Most of our elderly are poor with mounting medical bills. Since the majority of Americans are living paycheck to paycheck without adequate savings or retirement accounts, medical bills are one of the primary reasons for bankruptcy. Sometimes filing for bankruptcy is the best thing the elderly can do to help them survive. I encourage you to read http://www.digitaljournal.com/pr/503478 for more tips about how to deal with mounting debt as a caregiver. I would stress three things as my own advise: 1) Budget, budget, budget, 2) Look into programs that can supplement the loved one's income like the Medicaid CBA program, and 3) Seek help if needed like bankruptcy. Even the most frugal person sometimes needs help with medical bills.Ready to take the next step? Call 254-633-2876 or email me at info@thekehllawfirm.com today for a FREE, no-obligation consultation to discuss your options. 

My car has been repossessed! Can Bankruptcy help?

Maybe, but the timing of your bankruptcy and your behavior are critical. Once an individual filed for bankruptcy, the individual is protected by the automatic stay. The automatic stay prohibits any further collection activity against the individual. Furthermore, bankruptcy law prohibits anyone from controlling the property of the individual who filed bankruptcy.In plain English, if your vehicle has been repossessed but not sold yet and it is insured when you file bankruptcy, your bankruptcy attorney should be able to request the creditor return your vehicle to you. If the creditor refuses to return the vehicle, your bankruptcy attorney may file a motion asking for the bankruptcy court to order the creditor to return the vehicle to you.However, if the creditor has already sold your vehicle at auction by the time you file the bankruptcy, then your bankruptcy attorney cannot get the vehicle back for you. The timing of your bankruptcy is critical if you want your car or truck back. You must physically file the bankruptcy before the creditor can sell the vehicle at auction. Just meeting with a bankruptcy attorney is not enough. You must have filed your bankruptcy. So, if your vehicle has been repossessed, time is of the essence! Call 254-633-2876 TODAY for a FREE, no-obligation consultation.If the vehicle has already been sold at auction, you may still want to talk to an experienced Waco bankruptcy attorney about possibly filing bankruptcy to ensure you do not owe a deficiency on the vehicle (a deficiency occurs when there is a balance on the loan after the creditor sells the vehicle at auction), you do not have a tax problem later due to the repossession, and to clean up your credit. Many individuals who file bankruptcy are able to buy another vehicles after the bankruptcy is over. While I cannot guarantee that you will be able to purchase another vehicle after the bankruptcy is over, most people do.A recent case out of a Houston bankruptcy court also suggests that your own behavior may be considered when the court is determining your damages for the repossession. See my blog from earlier this month at http://thekehllawfirm.com/debtors-beware-bankruptcy-law-may-protect-but-your-own-behavior-may-cost/ for more information about this case.If you are drowning in debt and need help, please call today at 254-633-2876 or email us at info@thekehllawfirm.com for a FREE, no-obligation consultation with experienced staff. Saturday appointments are available, so call today. Welcome to your fresh start!

Hope for homeowners who are struggling to make their house payments

Since tomorrow is Thanksgiving, I wanted to do a blog today about giving thanks and hope for the future. Because to me, bankruptcy really is hope....a fresh start....the beginning of a new life. Then I looked at the foreclosure list at McLennan County Clerk's foreclosure website, http://www.co.mclennan.tx.us/cclerk/foreclosure.aspx. On December 6, 2011 over 75 homes are scheduled to be foreclosed on in McLennan County alone. Then I read an article that states that foreclosures have doubled since 2010 (see http://www.totalbankruptcy.com/bankruptcy-news/news-section/home-foreclosure-rates-skyrocket-800983726.aspx) and it is hard to find that hope and reason for thanksgiving. There are too many negative stories and realities out there to find hope.After hearing countless stories from residents of Waco, Temple, Killeen and surrounding area and my experience as a bankruptcy attorney, the problem with loan modification programs in existence is they are disorganized and difficult. Homeowners complain that mortgage companies lost paperwork. Mortgage companies complain about backlog and being overwhelmed. Only around 1/3 of loan modifications are successful.But then I found an article (I had to look pretty hard but it was there) talking about a pilot program where the bankruptcy court is actively involved in helping homeowners lower there house payments. (see http://www.heraldtribune.com/article/20111112/ARTICLE/111119827?p=1&tc=pg). Hope. This program is similar to other programs that are starting to appear around the nation and they appear to be working. New York, Rhode Island, and Vermont are all using mitigation portals as a part of the bankruptcy process. (see http://journal.abi.org/sites/default/files/2011/January/ConsumerCorner.pdf).These programs are pilots and not available everywhere. At this time Waco's bankruptcy court does not participate in any program like the one mentioned above. However, even though my court does not participate, I am able to use similar programs for my clients. I have found a program that is for struggling homeowners' attorneys that opens the lines of communication between the mortgage companies and the homeowner. It is for attorneys only. Everything is tracked so paperwork doesn't get lost. And, more importantly, the government watches as a silent partner. It is an extremely successful program and it is the program that is used by some of the courts above. I have helped struggling homeowners lower their mortgage payments and save their homes using these programs. You just have to know where to look.While I cannot guarantee that I can save your home, if you are struggling, come talk to me. It never hurts to explore your options. So, that is what I am thankful for this year....my ability to hope and find solutions for my clients.Struggling to make your payments? Call 254-633-2876 or email info@thekehllawfirm.com today for a FREE no-obligation consultation see what an experienced Waco Bankruptcy Attorney can do for you!

Debtors Beware! Bankruptcy Law may protect you but your OWN behavior may cost you!

If your vehicle has been repossessed and you file bankruptcy prior to it being sold at auction, the creditor must return the vehicle. Failure to return the vehicle is a violation of the automatic stay. However, in a recent decision out of Houston, Texas, the bankruptcy court looked at both the creditor and debtor's behavior. In this case, a debtor's vehicle was repossessed (but not sold at auction yet) prior to filing bankruptcy. The debtor filed for bankruptcy and his attorney demanded the vehicle be returned. The creditor refused. The debtor's attorney asked the bankruptcy court to order the return of the vehicle. The creditor still refused. Finally, the vehicle was returned. The debtor and his attorney asked for $25,000.00 in damages due to the delay in returning the vehicle. The bankruptcy court did find a violation of the automatic stay. However, the court stated that due to the Debtor's behavior prior to the repossession, it would only award approximately $7,000.00 in damages. The bankruptcy court stated:

 R.D. Affordable Foreign Auto Repair ("R.D. Auto") repossessed Jackson's automobile prior to bankruptcy. Jackson owed R.D. Auto money for services performed on the automobile. Ware, owner of R.D. Auto, went to extraordinary lengths to accommodate Jackson's precarious financial situation, but eventually repossessed the automobile for nonpayment. Jackson paid nothing on the amount owed for many months prior to bankruptcy, despite being employed. Simply put, Jackson took advantage of Ware's kindness and, understandably, Ware eventually became quite upset. This does not excuse Ware's refusal to turn over the automobile after Jackson filed for bankruptcy. Ware's violation of the automatic stay was egregious—at one point disregarding a court turnover order until a United States Marshall appeared to retrieve the automobile.

Property Taxes

If you are over 65 years old or disabled, then there is help if you don't have enough money to pay property taxes.It is that time of year again. Thanksgiving turkeys are defrosting, Christmas lights are being untangled, the dreidel song is playing in my head, and property taxes are due on January 31st. But what can you do if you don't have enough money left in your bank account to pay your property taxes?Ignoring the problem won't work. If you fail to pay your property taxes and you do not have a lien on your home, you might lose your home to foreclosure due to delinquent taxes. If you have another lien on your home like a home equity loan, the home equity company may pay the taxes for you but you will have to pay them back plus pay them for next year's taxes which will cause your house payment to go up.If you are over 65 or disabled, you may qualify for an exemption on your taxes which will help lower what you owe. However, did you know that you may also be entitled to pay your property taxes in installments without penalty or interest if you make your payments on time?If you are over 65 years old or older, you may be able to pay your property taxes in installments without interest or penalties if the installments are made on time. According to the State of Texas's (see http://www.window.state.tx.us/taxinfo/proptax/tx96_295_00/pay00.html):

If you are 65 or older and have applied for the homestead exemptions for senior citizens, you may pay your current taxes on your home in four installments. You must pay at least one-fourth of your taxes before February 1 (delinquency date). The remaining payments are due before April 1, June 1, and August 1, without any penalty or interest. If you miss an installment payment, you will have a penalty (12 percent) and also interest (at l percent for each month delinquent) added to the installment amount. You must indicate on your first payment that you are paying your home taxes in installments. Installment payments apply to all taxing units on the tax bill.

If You Can't Afford Your Home, Is Foreclosure Right for Your Family?

I was reading an article recently that predicted that there are so many families that cannot make their house payments that the foreclosure back log will last at least 3 years. In McLennan County, there were over 80 homes scheduled to be sold at a foreclosure sale in the month of November alone. In my Waco bankruptcy law office, I see many individuals who are behind on their home loans. I try to work with them to find the best solution for their family. While I have helped families in Waco and the surrounding areas save their homes through bankruptcy or loan modifications like the Home Affordable Modification Program (HAMP), other families have come to the difficult decision that they can rent cheaper than trying to continue to save their homes. If you can't afford your house payments or the hidden costs of owning a home, foreclosure may be the best option for you. Families across the nation are coming to the same decision about their homes.Deciding to let your home go to foreclosure does have consequences. For example, let's say you owe 100k on your mortgage. It is doubtful the mortgage company will be able to sell your home at a foreclosure sale for 100k. Suppose the home is sold at a foreclosure sale for 25k. Then there is a deficiency of 75k that you may owe depending on your type of mortgage loan. You mortgage company could try to sue you for that deficiency. Furthermore, you may have tax consequences from the deficiency in the form of a 1099-A. If you receive a 1099-A, you need to consult with a CPA to discuss your options. In addition, the foreclosure will show up on your credit report.I typically advise my Central Texas clients that if they are choosing to let their home go to foreclosure, they may want to file a bankruptcy along with the foreclosure. By filing bankruptcy, they are ensuring that they are not liable for any deficiencies or tax liabilities to the IRS. Basically, they are letting their home go to foreclosure knowing that they will not owe any more money on it. It is about peace of mind.Furthermore, the bankruptcy and foreclosure teamed together may help you purchase another home in a few years after the bankruptcy. I have worked with real estate agents who refer their clients for bankruptcies so they can clean up their credit and buy a home a few years after the bankruptcy. This strategy does not work for all clients, but I have seen it successfully help someone buy a home on more than one occasion.The bottom line is that letting your home go to foreclosure is not the right decision for every family. However, it might be the right decision for your family. You need an experienced attorney on your side who has dealt with foreclosures. At the Kehl Law Firm, we will listen to you and help you find a solution for your individual circumstances. Call 254-633-2876 or email us at info@thekehllawfirm.com TODAY for a FREE, no-obligation consultation to explore your options. If you are behind on your house payments, time is of the essence! Call today.

How Long will it Take You to be Debt Free? Use a Credit Card Repayment Calculator!

Are you overwhelmed by credit card debt? Unable to sleep at night? Worried about checks bouncing? Drifting without a plan? You are not alone. The average American family owes approximately $15,799.00 in credit cards. So, if you are the typical American family and you want to be debt free, you need a plan.For the typical American family to be debt free in two years, they need to pay approximately $788.75 a month towards their credit cards and refuse to charge any more. If you do that, you will pay off your credit cards plus a little over $3,000.00 extra. As a Waco bankruptcy attorney, I see most families in the Waco area can't afford almost $800.00 a month.So, let's say, you want to pay it off in 3 years. You would need to stop using credit cards and pay approximately $571.17 a month towards your credit card debt. At the end of three years, you would pay a little over $20,500.00 total.What will it take for you? Use the credit card payoff calculator to find out.
Credit Card Calculator
Free credit card payoff calculator by Bankrate.com
As a bankruptcy attorney, the problem that I see is life happens. People get ill, lose jobs, have babies, cars break down, you get divorced. It is hard and, if you are like most of us, you are living paycheck to paycheck. There is another way. I help people, good people who had hard times, just like you, eliminate credit card debt and start living a debt free life in 1 year or less and start saving money for their futures.Stop the cycle. Call 254-633-2876 or email me at info@thekehllawfirm.com TODAY for a FREE, no-obligation consultation to find your fresh start.

The Military and the Means Test

 Happy Veterans Day! At The Kehl Law Firm, we appreciate all the servicemen and women who have helped keep us safe. Today I am going to talk about some of the ways Congress has decided to help make bankruptcy easier for our veterans and active military who are overwhelmed by debt in the United States and specifically in Central Texas. In 2005, Congress drastically changed the U.S. bankruptcy laws. One of the major changes is an income test called the means test that was added to the bankruptcy code. Basically, the test looks at the last 6 months of gross income for the household filing bankruptcy and compares the income for households the same size in the same county. If you have more income that households the same size in the same county, there is a presumption that you cannot file a Chapter 7 bankruptcy. As a bankruptcy lawyer in Waco and Killeen, the reality is that I have filed numerous Chapter 7 bankruptcies for Central Texas families who "make too much to file bankruptcy" and defeated the presumption. They all have Chapter 7 discharges now. However, there are two ways to help Veterans and Active duty military with the means test. First, the Means Test Does Not Apply to Disabled Veterans One way Congress has tried to help veterans is by stating that disabled veterans do not have to take the income test. If your disability is rated at least 30% and more than half of your debt was incurred while you were on active duty or performing a homeland defense activity, you don't have to take the means test. This means you get to file for Chapter 7 bankruptcy regardless of how much income you make. Second, being on active duty might overcome the presumption for the means test If you are not a veteran and your income is high enough to cause the presumption that you should not be allowed to file a Chapter 7 bankruptcy, you might still be able to file for a Chapter 7 bankruptcy if you can show a special circumstance in your case. Although "special circumstance" is not defined in bankruptcy law, Congress has cited as an example of a special circumstance, "a call or order to active duty in the Armed Forces." This means that if you have extra expenses because of your military service that wouldn't otherwise be counted for purposes of the means test, you may be able to overcome a presumption of abuse -- and be permitted to file for Chapter 7 bankruptcy. Our active military and veterans have gone above and beyond the call of duty to protect this great country. I am honored to be able to give back. If you are drowning in debt, let us help. We offer military discounts and will work with you to find the best solution for your individual circumstances. Call 254-633-2876 or email us at info@thekehllawfirm.com today for a FREE, no-obligation consultation to see what an experienced Central Texas bankruptcy attorney can do for you! We offer evening and Saturday appointments. Sign up for our Bankruptcy Information Mailing List.  This list is for those who have questions about bankruptcy as well as clients of The Kehl Law Firm, P.C.  Sign Up

The Military and Foreclosure Class Action Lawsuits

In honor of Veterans' Day 2011 this Friday, I have dedicated my blog to the military this week. Earlier this week, I discussed the Servicemembers' Civil Relief Act (SCRA) and the protections it offers our military and their families. The SCRA states when a member of our military is on active duty or was just recently been released from active duty, a lender may not foreclosure on a home, car, or other collateral without first obtaining a court order. This protection is significant here in Central Texas since most foreclosures on homes and repossessions of cars in Texas can happen by law without a court order. Please note that the SCRA does not state that the foreclosure or repossession cannot occur, but rather the lender must get a court order first. By obtaining a court order first, the foreclosure and repossession are delayed but not avoided. So, what are your remedies when the SCRA is violated and you lose your home or car because a court order was not obtained first? Unfortunately that is what is happening around the nation and people are starting to file class action lawsuits against the lenders. However, the remedies from these class action lawsuits are not always enough. I had a client in the Ft. Hood / Killeen area who was involved in one of the class action lawsuits and she received $200.00 in damages. See http://www.myguidon.com/index.php?option=com_content&task=view&id=13697&Itemid=39. There are numerous other wrongful foreclosure class actions popping up against Citimortgage (see http://consumerist.com/2011/07/lawsuit-alleges-citi-illegally-foreclosed-on-thousands-of-soldiers-homes.html) and JPMorgan (see http://news.firedoglake.com/2011/04/24/jpmorgan-settlement-continues-their-persistent-attention-to-just-one-type-of-foreclosure-fraud/). Violations are so rapid that one law firm is looking for people's stories regarding other mortgage companies which have not been sued yet. And the mortgage companies are not alone as defendants in these lawsuits. Ford has been sued regarding repossession of vehicles and interest rates. (see http://www.topclassactions.com/lawsuit-settlements/lawsuit-news/1400-servicemembers-file-scra-class-action-lawsuit-against-ford-). However, all of servicemen and women and their families lost their homes or cars due to falling behind on their payments. While the Servicemembers' Civil Relief Act was violated and they may get some damages for that, even if the SCRA was followed, the repossession or foreclosure might have still happened. The SCRA just delays it while a court order is obtained. If these individuals and their families filed for bankruptcy, they might have been able to save their homes and cars. And that is the real tragedy. If you are behind on your house or car payments, call 254-633-2876 today or email us at info@thekehllawfirm.com for a FREE, no-obligation consultation to see what your options are. Once a foreclosure or repossession happens, it may be too late. Don't wait. Sign up for our Bankruptcy Information Mailing List.  This list is for those who have questions about bankruptcy as well as clients of The Kehl Law Firm, P.C.  Sign Up 

Payday Loans and the Military

In my experience as a Waco Bankruptcy Attorney, payday lenders are the worse people you can owe money to. Interest and penalties can run up to 800% and many individuals complain that they just can't seem to pay them off. I have received numerous frantic calls from clients worried because a payday lender has threatened to put them in jail or told the client that I was lying and bankruptcy laws can't help them. I have yet to see a client go to jail due to a payday loan or a payday that isn't covered by the bankruptcy laws. Since my bankruptcy office is so close to Ft. Hood and Killeen, I see payday lenders prey on our military servicemen and women all the time and it is a tragedy. A few years ago, Congress passed a law making it more difficult for payday lenders to make loans to our military personal, but it is still happening especially on the internet. Just try googling payday loans and military. I learned about some companies that will give special discounts to the military. The law prohibited interest rates of more than 36% to military personal and their families. It also limits the payday lenders ability to ask for a post-dated check or banking information. Furthermore, the law prohibits:

Security Clearance and Bankruptcy

Are you overwhelmed by debt but scared to file bankruptcy because of fear that you might lose your security clearance? The reality is that filing bankruptcy might be the best thing you can do for your security clearance. Who is more likely to sell state secrets for money or accept a bribe--the person with large amounts of unpaid debt or the person who wiped out their debt by filing bankruptcy? The reality is that high credit card balances are more likely to hurt your record than a bankruptcy. Filing bankruptcy won't, by itself, affect your security clearance. However, the circumstances surrounding your decision might. If you file bankruptcy every few years to wipe out your excessive credit cards, your security clearance could be affected, not by the bankruptcies per se, but due to your continued history of poor judgment with regards to money. On the other hand, if you are transferred and your home is going to foreclosure, filing bankruptcy may be a smart decision to avoid tax consequences and possible lawsuits due to the foreclosure. In other words, each case is looked at individually and losing your security clearance due to filing bankruptcy is not a guarantee. In fact, it rarely happens. As a bankruptcy attorney near Ft. Hood and Killeen, I have filed bankruptcy for many Ft. Hood soldiers, civil employees, and contractors who have retained their security clearance. Many of them asked for letters to their commanding officers explaining that they are filing bankruptcy. They want these letters to demonstrate that they are dealing with the problem to help their security clearance. They want to show their commanding officers that they are not sticking their heads in the sand. It is important to show that you are dealing with your debts before losing your security clearance, because, once you have lost it, it may be difficult to get it back and even filing bankruptcy may not help you. I know of one case where the individual had already lost his security clearance due to excessive debt. He attempted to file bankruptcy to regain his security clearance and was denied. He did not lose his security clearance due to the bankruptcy. He lost it because he had excessive debt and was not dealing with the problem. Maybe that is the lesson. It is better to deal with your debt problem to reduce the likelihood that you are a security risk. Even various branches of the military have stated that filing bankruptcy does not automatically mean you will lose your security clearance and might even help it. The Air Force Academy's website specially addresses security clearance. See http://www.usafa.edu/superintendent/ja/bankruptcy.cfm?catname=JA.

Protection for the Military from Creditors: Servicemembers' Civil Relief Act

Since Friday is Veterans Day 2011, I thought in tribute to our military I would do some blogs this week about bankruptcy and our military. It is impossible to thank our military and their families enough for the service they provide. It is unfortunate that the military are targeted by so many predatory creditors. Having an office so close to Ft. Hood, I have helped many active military and veterans and their families find relief from creditor harassment and lawsuits under the Bankruptcy code and the Servicemembers' Civil Relief Act (SCRA).The Servicemembers' Civil Relief Act protects members of our military and co-signers on their debts which is typically their family. To qualify for protection under the Servicemembers' Civil Relief Act, the member of our military just demonstrate that their service of this country is materially affecting their ability to pay their bills. The Servicemembers' Civil Relief Act offers various for our military personal and their families from creditors. Some examples of those protections are found below. This list is just a general example of some protections and is not legal advice.Under the Servicemembers' Civil Relief Act, a servicemember may cap the interest rate on some obligations to 6% while the servicemember is on active duty. These obligations may include credit cards, car loans, mortgage, and personal loans but not federal guaranteed student loans. The servicemember must have obtained the obligation prior to being called on active duty. The capped interest rate does not apply to any addition debt incurred on the obligation while the servicemember is on active duty. For example, if the servicemember has a credit card with a balance of $1,000.00 prior to being called onto active duty and the servicemember continues to use the credit card while on active duty, then 6% cap applies only to the balance prior to being called to active duty or in this example $1,000.00. To obtain the cap on interest, the servicemember must give the creditor written notice of the call to active duty and a copy of his or her military orders during the active duty or up to 180 days after the release from active duty.Servicemembers' Civil Relief Act protects our military personal from evictions from their homes. If the military personal receives an eviction notice, he or she can seek court protection under SCRA claiming that military service materially affected his or her ability to pay the rent in a timely manner. In addition, to qualify, the military personal or his or her family must show the court that they occupy the property as their home and the monthly rent is less than a certain limit that changes periodically due to inflation.While the servicemember is on active duty, there are limitations to a creditor's rights to repossession of collateral of secured loans like vehicles and homes. Later this week, I will blog about some of the class action lawsuits where servicemembers are suing their mortgage companies for foreclosures in violation of the SCRA. However, briefly, these provisions apply if the contract was entered into prior to the servicemember going on active duty and the servicemember has made at least one payment under the contract. Once these requirements are met, the creditor cannot repossess the property (i.e., vehicle, furniture, house) or terminate the contract while the servicemember is on active duty without a court order.Regarding residential leases, the Servicemembers' Civil Relief Act allows members of the military to break a lease when they are called to active duty, transferred to another station, or deployed. To break a residential lease under these provisions, the servicemember must make the request in writing, and must include a copy of his or her orders placing him or her on active duty, transfer orders, or deployment orders. The member may deliver the notification by hand, by commercial carrier, or by mail (return receipt requested).When someone is sued in civil court and he or she does not make an appearance in that court, the other side may take a default judgment against the person who did not appear. A default judgment is a judgment that is called a different name because the person sued did not appear in court. Under the Servicemembers' Civil Relief Act, the servicemember may vacate, or set aside, the default judgment if the servicemember can show that he or she did not appear in court and he or she did not have notice of the court proceedings. Appearance in court is not necessary a physical appearance.Furthermore, if the servicemember is sued in civil court, under the Servicemembers' Civil Relief Act, the servicemember may stay or postpone the civil court proceeding for 90 days if the servicemember has notice of the proceeding and is on active duty or within 90 days of release of active duty. The servicemember must two letters. First, the servicemember must submit a letter demonstrating that due to active duty the servicemember is unable to appear and state when the servicemember would be able to appear. Second, the servicemember's commanding officer must submit a letter demonstrating that the servicemember's active duty prevents appearance in court and military leave is not authorized.If you would like more information about the Servicemembers' Civil Relief Act and other benefits that were not discussed here, please see http://usmilitary.about.com/od/sscra/l/blscramenu.htm, http://www.justice.gov/usao/az/rights/Servicemembers_Civil_Relief_Act.pdf, and http://usmilitary.about.com/cs/sscra/a/scra2.htm. Please understand that this blog is not legal advice or inclusive of all information about the Servicemembers' Civil Relief Act. You should consult an attorney before using the Servicemembers' Civil Relief Act.If you are drowning in debt and need help, please call today at 254-633-2876 or email us at info@thekehllawfirm.com for a FREE, no-obligation consultation with experienced staff. Saturday appointments are available, so call today. Welcome to your fresh start!

A New Hope for Relief From Student Loans?

In my bankruptcy practice, I frequently get asked if bankruptcy can help with student loans. Unfortunately, in Waco, Texas bankruptcy isn't really a viable option to help with student loans. However, there may be a new hope. Last week, President Obama proposed a new plan to help alleviate the burden of student loans.  This new proposal helps but it is a far cry from a plan that will fix the student loan industry. The proposal has two components. First, it proposes a new consolidation program. This program will have a lower interest rate than traditional consolidation programs. It will be available to individuals to who have at least one Direct Loan or FFEL loan that is held by the Department of Education AND at least one private student loan. This program will only be available for the first half of 2012. The second component is the Pay as You Earn program. The details of this program have not been worked out yet. Individuals who are struggling with student loan debt should consider the income-based repayment plan which is currently in effect. While it is flawed, I have seen individuals who have been very pleased with the results. For more information about income-based repayment, see http://studentaid.ed.gov/students/attachments/siteresources/IBR_QA_2010-07-01_FINAL.pdf.Unfortunately, even with these new proposals, student loans continue to be a problem without any real solutions. If you need help with overwhelming debt, please call today at 254-633-2876 or email me at info@TheKehlLawfirm.com for a FREE, no-obligation consultation with an experienced Waco bankruptcy attorney.Join our Bankruptcy Information Mailing List 

Debt Collection FAQs

Are you behind in paying your bills? Is the phone ringing off the wall? Are you afraid to go to the mailbox? Does your credit report continue to have old charged off debt reappearing even though you have disputed them? If this sounds like you, read on because you may be having problems with a debt collector.The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.Here are some questions and answers about your rights under the Act.

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. We provide this service at The Kehl Law Firm once a client has retained our firm. We will take the phone calls and letters for you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

What practices are off limits for debt collectors?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
  • use threats of violence or harm;
  • publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
  • use obscene or profane language; or
  • repeatedly use the phone to annoy someone.
False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
  • falsely claim that they are attorneys or government representatives;
  • falsely claim that you have committed a crime;
  • falsely represent that they operate or work for a credit reporting company;
  • misrepresent the amount you owe;
  • indicate that papers they send you are legal forms if they aren’t; or
  • indicate that papers they send to you aren’t legal forms if they are.
Debt collectors also are prohibited from saying that:
  • you will be arrested if you don’t pay your debt;
  • they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
  • legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
Debt collectors may not:
  • give false credit information about you to anyone, including a credit reporting company;
  • send you anything that looks like an official document from a court or government agency if it isn’t; or
  • use a false company name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
  • try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
  • deposit a post-dated check early;
  • take or threaten to take your property unless it can be done legally; or
  • contact you by postcard.

Can a debt collector garnish my bank account or my wages?

If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can't be garnished in the State of Texas.

Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:
  • Social Security Benefits
  • Supplemental Security Income (SSI) Benefits
  • Veterans’ Benefits
  • Civil Service and Federal Retirement and Disability Benefits
  • Service Members’ Pay
  • Military Annuities and Survivors’ Benefits
  • Student Assistance
  • Railroad Retirement Benefits
  • Merchant Seamen Wages
  • Longshoremen’s and Harbor Workers’ Death and Disability Benefits
  • Foreign Service Retirement and Disability Benefits
  • Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
  • Federal Emergency Management Agency Federal Disaster Assistance
But federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What should I do if a debt collector sues me?

If a debt collector files a lawsuit against you to collect a debt, do not respond to the lawsuit yourself, you should contact us for a free consultation.Are you to stop the phone calls? Call The Kehl Law Firm, P.C. at 254-633-2876 or email at info@thekehllawfirm.com today for a FREE, no obligation consultation with an experienced Waco bankruptcy attorney. Welcome to your fresh start!
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