The Wright Firm's Weblog

DON’T FALL FOR THE PAYDAY LOAN TRAP!

Payday loans are short-term, high-interest loans given as an advance against your next paycheck.  Usually the lender will require that the customer leave a predated personal check which can be cashed on the date of the customer’s next payday.  Lenders charge $15 to over $20 per $100 borrowed for a two-week loan, which translates into an interest rate of 520 percent per year or more.

 

Customers also have the option to pay only the interest on the loan, and to carry the principal to the next paycheck.  The result is predictable.  If someone needs to borrow $500.00 today for an unexpected expense, or to pay their bills, it is unlikely that they will have $600.00 to repay the debt in two weeks.  Many customers don’t have the money to pay the entire principal on time, so they start a cycle of paying the interest only each payday, never making any gain on the principal, and in this way they stay in debt to these lenders for years.

 

In my bankruptcy practice, I see these types of loans regularly.  My clients often follow the same progression of indebtedness.  First, they get behind on their regular bills, mortgage, or car payments.  Next, they use credit cards to make up their financial shortfall.  When they have reached the limit on their credit cards they sometimes turn to payday loans.  If you see yourself heading down that path, contact me to discuss your financial situation.  My clients can often resolve their financial troubles simply by changing their strategy for repaying their debt or by making some minor changes to their budget.  If bankruptcy is needed, I can help my clients file and advise them on how to protect their assets.

 

The attorneys at The Wright Firm offer free initial consultations to clients in need of help with their financial situation.  Call Nathan Graham, a bankruptcy attorney at The Wright Firm, at 469-635-6000 or visit the firm’s website at www.thewrightlawyers.com for more information.

 

FIVE REASONS TEXANS FILE BANKRUPTCY

There are literally dozens of good reasons for debtors to file bankruptcy when faced with a tough financial situation.  These are the most common reasons why people declare bankruptcy:

 

1.   End garnishments from paychecks.  In Texas, creditors can’t garnish your paychecks to collect on a judgment.  But there are two government agencies that can garnish your wages.  The Attorney General can garnish wages to collect child support arrears.  Filing bankruptcy will stop the garnishment of arrears but will not prevent garnishment of ongoing child support payments.  Similarly, the Internal Revenue Service can garnish wages to collect taxes.  Sometimes these garnishments will leave the debtor with very little money to live on.  Filing Chapter 13 bankruptcy may allow debtors to repay their taxes and child support arrears over a longer period of time, reducing what they are required to pay each month, leaving them with more money to live on.

 

2.   Stop harassment from creditors and collection agencies.  Filing bankruptcy puts into affect a stay against creditors.  This means that once a creditor or collection agency receives notice that a debtor has filed bankruptcy they have to stop all attempts to collect debt.  That means that all of those annoying phone calls, threatening letters, and harassment will end soon after filing bankruptcy.

 

3.   Discharge debt.  Debtors in bankruptcy may be eligible to discharge part or all of their debt.  Discharging debt means that the debtor is no longer responsible for repaying the debt.  There are some debts that are not eligible for discharge.  The three most common types are student loans, domestic support obligations and income tax.  There are other exceptions as well, so prospective bankruptcy filers should discuss with their attorney how bankruptcy will affect their debts.

 

4.   Prevent foreclosure or repossessions.  One of the most common reasons people file bankruptcy is to stop foreclosure of their home and prevent repossession of their vehicles.  Chapter 13 debtors who are behind on their house payments and/or car payments can elect to cure these arrears in their Chapter 13 plan, which gives them an opportunity to get caught up on their payments.  Also, the automatic stay will stop the foreclosure and/or repossession of the collateral.

 

5.   Stop lawsuits.  If you have been sued, filing bankruptcy will stop the lawsuit in most cases.  If the lawsuit has already resulted in a judgment, bankruptcy may allow you to discharge the debt so that the judgment can’t be attached as a lien against your property or collected upon through levying your bank account.

 

Everyone’s financial situation is different.  Before pursuing bankruptcy you should speak with an experienced bankruptcy attorney about your specific situation.  Phone consultations and your first meeting with an attorney to discuss bankruptcy are free at The Wright Firm.  Call Nathan Graham, a bankruptcy attorney at The Wright Firm, at 972-353-4600 or visit the firm’s website at www.thewrightlawyers.com for more information.

 

CHAPTER 13 BANKRUPTCY AND THE HARDSHIP DISCHARGE!

Chapter 13 bankruptcy requires that a debtor make payments to a trustee for three to five years under a repayment plan filed by the debtor at the beginning of their bankruptcy case.  At the end of the plan the debtor receives a discharge of any remaining dischargeable debts.  Sometimes a debtor files chapter 13 bankruptcy, makes payments for awhile, but then their circumstances change and they are unable to continue making payments.  When this happens there are a few options.  First, the debtor can convert the bankruptcy case to a case under chapter 7.  Conversion requires that a debtor file new schedules and statements with the court and attend another 341 meeting with a trustee.  Second, the debtor can  file a plan modification and lower their plan payment.  This option is only available if the debtor’s plan provides for payments to unsecured creditors.  If this is the case, the debtor can modify their plan to reduce payments to unsecured creditors, provided they can show that they can still afford payments to the secured and priority creditors listed in their plan.

 

There is a third option,  known as the “Hardship Discharge” which is much simpler, quicker, and less costly than a plan modification or conversion.  Section 1328(b) of the Bankruptcy Code allows chapter 13 debtors who have not completed their plan to receive a discharge if they meet three requirements.  First, the debtor’s failure to complete their plan must be due to circumstances for which the debtor should not justly be held accountable.  For example, if a debtor is laid off from their job or becomes sick and can no longer work.  Second, the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7.  This means that if the debtors had nonexempt property when they filed their chapter 13 case, they must have paid enough money during their chapter 13 case to provide the unsecured creditors payments equal or greater than the value of the nonexempt property.  Third, modification of the plan is not practicable.  Generally this means that the debtor is not earning enough to support a chapter 13 plan payment, or the debtor does not have disposable income to be paid to the unsecured creditors and there are no secured or priority claims to be paid in the plan.

 

Use of the hardship discharge is limited to very specific circumstances.  Most chapter 13 debtors will resolve changes in their financial situation by filing a plan modification or a conversion, but for those debtors that meet the above requirements, the hardship discharge provides a quick and inexpensive way to petition the court to receive a discharge without completing their chapter 13 plan.

 

Bankruptcy is a very complex legal field.  Before making the decision to file bankruptcy you should consult an experienced bankruptcy attorney.  For more information about filing a bankruptcy in north Texas, contact The Wright Firm, L.L.P. at 469-635-6900 or visit our websites at www.thewrightlawyers.com or www.northtexas-bankruptcy.com.

 

BANKRUPTCY: “MY BANK WON’T GIVE ME MY MONEY!”

 When I meet with clients to prepare for their bankruptcy filing, one of the questions I ask is whether they have a bank account with a financial institution they owe money.  If they do, I advise them to move their money to another bank.  When you deposit money, you are loaning money to the bank.  It may not seem like a loan, because the bank promises to return this money to you when you ask for it, but it is in fact a loan.  In situations where you also owe the bank money, a “mutual obligation” exists, meaning both you and the bank have a duty to repay and a right to be repaid.  If you default on your loan, they will take money from your bank account.  This is referred to as a “setoff.”  If you get behind on your payments, the first thing you should do is move your money to a financial institution you don’t owe money.  If your bank freezes your bank account, then you should consider discussing your financial situation with a bankruptcy attorney.

 

For more information about filing a bankruptcy in north Texas, contact The Wright Firm, L.L.P. at 972-353-4600 or visit our websites at www.thewrightlawyers.com or www.northtexas-bankruptcy.com.  Each case is different so be sure to contact an attorney to discuss the specific facts of your case.

This Site is a public resource for general information about The Wright Firm, L.L.P. and Texas Law.  Nothing in this Site should be construed by you as a source of legal advice. You should not rely or act upon the contents of this Site without seeking advice from your own attorney. Use and access to this Site or any materials or information provided on this Site does not create an attorney-client relationship between you and The Wright Firm, L.L.P. or any of its attorneys,  nor is this Site a substitute for legal advice. Any information submitted by you by The Wright Firm, L.L.P. or its attorneys via this Site, an email, or any form of social media communication will not be considered an attorney-client communication or otherwise be treated as confidential or privileged in the absence of an executed Engagement Agreement between you and The Wright Firm, L.L.P. or its attorneys.

 

 

 

 

 

IS BORDERS’ BANKRUPTCY THE BEGINNING OF THE END FOR BOOKSTORES?

I generally limit my topics to consumer bankruptcy matters, but as a bankruptcy attorney who is also a booklover, I had to comment on this bankruptcy filing.  Borders bookstore has filed bankruptcy.  Is anyone really surprised?  The so-called experts have predicted the end of brick-and-mortar bookstores for years.  The first sign of the end of the modern bookstore may have been the creation of Amazon.com which allows consumers to buy books from the comfort of their couch at a discounted price.  Then came e-readers like the Kindle and the I Pad.  We readers no longer have the burden of turning a page, or carrying something as heavy as a hardcover book.  Barnes and Noble surely saw the writing on the wall when they introduced the Nook, their version of an e-reader.

 

You may have also heard that some schools are replacing textbooks with net books, laptops and tablets.  Should we be outraged or sad at this change?  For a moment, let us reminisce about the good ole days when books were paper.  Do you remember the smell of your books?  The feel of the pages between your fingers?  I think about these things sometimes when I sync my Kindle to my Blackberry to update my bookmarks.

 

About the Author:

Nathan Graham is an associate with the firm. He received his Bachelor of Arts in Interdisciplinary Studies from the University of Texas at Dallas. Nathan continued his education at Texas Wesleyan School of Law in Fort Worth, Texas where he received a law degree and was an active member of the Moot Court Honor Society.

Prior to joining the firm Nathan was an associate at a Fort Worth law firm specializing in representing debtors in consumer bankruptcy cases. While in that position he represented thousands of clients in Chapter 13 and Chapter 7 bankruptcy cases.

Nathan is admitted to practice law in the Northern and Eastern Districts of Texas, 

 

 

When You Can File For Protection Under Chapter 7 of the Federal Bankruptcy Code

The two most common forms of consumer bankruptcy filings are Chapter 7 and Chapter 13 petitions. Under Chapter 7, also known as liquidation, you are allowed to permanently discharge certain debts in exchange for the sale of non-exempt assets. Some debts, such as child support arrearages, student loans, and certain tax obligations, may not be discharged in a Chapter 7 proceeding. Furthermore, you generally cannot rid yourself of any secured debt (like a house or car), and still keep that property. With a Chapter 13 bankruptcy, also known as reorganization, you enter into new payment arrangements with your creditors, generally agreeing to repay debts over a three-to-five-year period. Whether you seek protection under Chapter 7 or Chapter 13, you are entitled to the benefits of the automatic stay, which prohibits creditors from calling, writing or taking legal action against you (outside of the bankruptcy proceeding) to collect the debt.

Before the 2005 revisions to the bankruptcy laws, there were few restrictions on who could file for Chapter 7 bankruptcy. One of the goals of the new law was to reduce the number of cases where debtors simply walked away from large amounts of debt. As a result, lawmakers changed the eligibility requirements for Chapter 7, mandating that anyone seeking to permanently rid themselves of debt submit to a “means test.” Under the means test, you must provide the bankruptcy court with information about assets, income and obligations, so the court can determine whether you have the financial “means” to repay your creditors.

The means test is applied based on information unique to the state in which you live. When conducting the means test, the court will look at your average income for the six month period before you filed for bankruptcy and compare it to the median income in your state. If you are below the median, you automatically qualify to file under Chapter 7.

If your average income exceeds the median income for your state, the court will look at other factors, starting with a careful examination of your discretionary income. To determine this figure, the court will subtract your living expenses from your income and multiply it by 60 (the amount of extra income you would have over a five year period). If the funds available for debt reduction exceed $10,000 ($166.66 per month), you may only file under Chapter 13. If the amount available for debt repayment is less than $100 per month, you may file under Chapter 7.

If your discretionary income falls between $100 and $166.66 per month, your eligibility for Chapter 7 is determined based on the percentage of your discretionary income to your debt, with 25% as the cutoff. If your discretionary income over 60 months exceeds 25% of your debt, you must file under Chapter 13. If it is less, you can file under Chapter 7.

You may also be ineligible to file for Chapter 7 if you have previously discharged debt in a bankruptcy proceeding. A debtor cannot eliminate debt under Chapter 7 within 8 years of the discharge of debt in another Chapter 7 proceeding.

Texas Court Room Rules

Top 10 Texas Court Room Rules

 Have you ever been to court?  Unless you’re going to the court house for jury duty, appearing for one of your own hearings can be a very scary experience.    If you are scheduled to appear in a court in Dallas, Denton, Collin, or Tarrant Counties, here are some things you need to know.  Maybe you are appearing for your divorce or family law hearing, a contested probate case, a criminal hearing, or a final trial in a civil matter. 

 

Because judges have different preferences, and “courtroom custom” may vary depending on the county and the judge, the following is intended to provide a top 10 list of things you should know before you get to the court house:

 

1.      Always be prompt.  If your hearing starts at 9:00, you probably need to be there at least thirty minutes early.  For example, in a Denton Divorce case, your Denton County Divorce Attorney may want you at the court house even earlier because many times settlement negotiations will take place at the court house.  Do not be late!  The judge may not wait on you.  The judge will call the case at the time designated and if you are not there the judge will proceed and could dismiss the case if you are not in attendance or even worse the other side could get the relief that they are seeking.  Also, know where you are meeting your lawyer before the hearing. 

 

2.      Stand when the judge enters or leaves the courtroom. Being a judge is an extremely difficult job.  Judges must look at all sides and make as best of a decision in each case as possible. The things they have to see and hear about are horrendous. Standing is a simple sign of respect. We stand when we do the pledge of allegiance, or when the national anthem is being played. We stand when a bride walks down the aisle, or when the president comes into a room. 

 

3.      Do not make personal attacks on opposing counsel or the opposing side.  The other lawyer is just doing their job.  Remember the other lawyer is not going to decide your case.   Have the hearing in the court room not in the hall.

 

4.      Do not interrupt the Court or opposing counsel. Wait your turn.  I see this every day at the court house.   The judge will let you have your turn and will let you have a chance to respond to what the other side or the other lawyer is saying. 

 

5.      No children are allowed in the Courtroom during Court proceedings. The court house is not a day care.  There is no one to watch your children.  For example, if you have a Dallas Divorce case, why would you want your children to sit in the court room and have them listen to the complaints of you and your spouse.  One judge has even told me that if he sees that a party brings a child to the court house, without court permission, he is already thinking in his mind that you do not have your child’s best interest in mind. 

 

6.      No food, drinks, chewing gum, candy or tobacco products are allowed in the Courtroom.   For example, the Collin County Court house is paid for with tax payer money and is needed for the benefit of all citizens.   The request for no food or drink just ensures that the buildings will remain nice and clean for us all in the future.

 

7.      No hats, caps, shorts, tank tops, halter tops or provocative clothing (this includes wording, pictures and the manner in which the clothing is worn).  This really is a lawyer’s pet peeve.  As a Family Law Attorney in the Denton County Courts,  I  have personally taken clients shopping before a hearing.  You are not going to the spa, the beach, and you will not sway the judge by what you are wearing.   Years ago while up in the Denton County Courts, I witnessed a bailiff instruct a person to turn their “This Buds for You”  t-shirt inside out.  Remember this is also a sign of respect.   

 

8.      All pagers, cell phones or other portable communication devices must be turned to the off position. No communication devices shall be operated in the Courtroom. No audible sounds from the communication devices shall be permitted.  In many North Texas court rooms, if your cell phone goes off, it will be confiscated and not returned until you pay the fine for its return.  I have witnessed in the middle of my hearings the opposing party’s cell phone going off while they were on the witness stand.  Do we think that helps or hurts their case? 

 

9.      All talking shall be at a minimum while court is in session.  The judge cannot hear what is going on in the court room if everyone is talking.  If you want to talk to your lawyer, go out in the hall.

 

10.    All persons addressing the court and/or staff shall do so in a respectful manner (i.e. yes sir, no sir, yes ma’am, no ma’am).   Yelling at the bailiff, the court reporter, the court coordinator is never helpful or advised. 

             These are just a few guides that we tell our clients on a day to day basis.  At The Wright Firm, L.L.P. we have offices in Dallas, Denton, Collin, and Tarrant counties in North Texas.  We also handle family law and divorce, criminal matters, bankruptcy, probate and estate planning, immigration, and civil litigation.  If you have questions about this article or a case that you may have, please visit our website at www.thewrightlawyers.com or send me an email at [email protected] for more information.  Thank you for reading this article.