Associated Press reports that the Bush administration is still exploring bailout options for U.S. automakers; but has suggested that U.S. automakers may have to face an “orderly” bankruptcy. Detroit’s big three automakers have suffered the most sluggish sales in 26 years and are quickly running out of cash. The Bush administration says they want to avoid an automaker bankruptcy if possible but have conceded that bankruptcy is a serious possibility.

Both the automakers and the United Auto Workers union strongly oppose any type of bankruptcy for the big three automakers facing financial trouble. According to the Associated Press, The National Automobile Dealers spoke out against bankruptcy “in any way shape or form, orderly or disorderly, prepackaged or unpackaged, managed or unmanaged.” According to the Bush Administration a “disorderly bankruptcy” would be a Chapter 7 bankruptcy which would completely shut down the automakers’ companies and require the sale of assets to repay creditors. A Chapter 11 bankruptcy on the other hand would be categorized as “orderly” allowing the automakers to restructure their debt obligations.

It’s unfortunate; but most likely Americans will need to prepare themselves for some financial shockwaves, because it is almost guaranteed that at least one of these automakers will go bankrupt. The automakers are already getting desperate as they do everything humanly possible to conserve cash by enforcing extended holiday shutdowns of their plants. Chrysler is closing all 30 of its North American manufacturing plants for four weeks, Ford will shutdown 10 North American assembly plants for an extra week in January and General Motors will close as many as 20 factories for the entire month of January. That doesn’t sound exactly orderly to me. When companies shutdown, close or go on “extended holidays” they don’t make money and when they don’t make money they’re just one step closer to bankruptcy.

To decrease the chances of trouble when filing for bankruptcy, make sure you list and properly notify all of your creditors. That includes creditors that may not show up on your credit report, such as landlords (in the case of renting), personal loans from friends and family and other debts that aren’t normally listed on the credit report.

Although a bankruptcy may, in certain circumstances, discharge an unlisted debt, if the creditor was not properly notified or the debt was unlisted, there may be a limit to the amount a debtor can recover if there is a stay violation by the unlisted/improperly notified creditor. A stay violation occurs when a creditor takes some kind of action which is specifically prohibited by the Bankruptcy Code after a bankruptcy case has been filed on behalf of the debtor. For example, if a creditor garnished a debtor’s wages or seized a bank account during a bankruptcy, the debtor can recover damages. But if the creditor was not properly notified of the bankruptcy, the debtor may not be able to receive the full amount in damages.

Under the bankruptcy law reform in 2005, creditors can request that bankruptcy notices be sent to a specific address. This special bankruptcy address is usually listed by each creditor on the debtor’s credit report. Debtors must send all correspondence regarding the bankruptcy to this special address designated for bankruptcy by creditors.

According to an article in the Dallas Morning News, the cost of gasoline and heating has declined significantly, that’s good news for families facing mounting debt. The EIA report, featured in the article, predicted that the average cost of gasoline could decline to as little as $2.03 per gallon by this time next year. The price of gas and diesel has already fallen by $2 a gallon since July. This week the average price for gasoline was $1.70 and the EIA report projects that energy for heating this winter will be one-fourth of last year’s prices. Families who use natural gas will probably pay on average about $860 for heat this winter compared to the $1,570 paid by the average family last year.

This is great news for families who have been hit with job losses, reduced income and rising debt. Seniors will especially benefit because many are suffering financially with retirement funds that aren’t producing anywhere near the income they expected to receive. That means many have been unable to pay debts and basic living expenses, making this decline in energy costs a much needed relief.

It’s in the news almost daily; companies going bankrupt or closing their doors leave thousands jobless. But what we don’t hear about is the massive amount of medical debt many former employees are saddled with. When a company announces that they are going bankrupt or closing, many employees rush out to get much needed medical care such as, check ups, medication and operations; but many end up with huge medical debts. Why? Because often when a company notifies its employees that they are going bankrupt or closing they have already stopped paying into medical insurance and the employees are no longer insured.

If your employer announces that they are going bankrupt or closing check with human resources to see if you are still covered under the medical insurance plan before you go out and rack up unexpected medical debt. It’s also important to know that when a company files for bankruptcy or closes its doors, former employees may not be eligible for COBRA especially if the company is being completely liquidated through bankruptcy and not restructuring debt in bankruptcy.

If you have inadvertently accumulated thousands of dollars in medical debt because your employer went bankrupt or closed its doors, speak with a bankruptcy attorney about your personal bankruptcy options.

Most debtors file for bankruptcy as a last ditch effort to dig themselves out of the hole when their debt troubles are just too much to handle. But often their last stop right before bankruptcy is debt settlement. There are a lot of companies out there that offer debtors the opportunity to settle their debts with creditors for "pennies on the dollar." Sound too good to be true? Well, many debtors coming to bankruptcy court after going through "debt settlement" have found that at least in their case, it is too good to be true. What a lot of debt settlement companies fail to tell their customers is that debt settlement is risky and not guaranteed. The debt settlement companies require upfront fees; but they can’t guarantee the debtor that the creditor will accept the debt settlement offer. Many debtors go through debt settlement and still end up having to file bankruptcy because their creditors would not accept the debt settlement offer.

The other problem with debt settlement is that many debtors, actually most debtors are not good candidates for debt settlement. The best candidates for debt settlement are people who have so much income and/or assets that bankruptcy is not a viable or easy option. These people can afford to pay debt settlement fees and can afford to pay for the taxes owed on the forgiven debt. Yes, debt settlement leaves a tax bill.

Any debtor considering debt settlement should speak with a bankruptcy attorney first to find out if bankruptcy would be a better option.

It’s that time of the year again, Xmas trees, shopping sprees and a long list of parties to attend. But what’s been on the minds of most Americans lately is just how bad the economy has become. So many companies, once considered robust and even invincible have gone bankrupt, are filing bankruptcy or are rumored to be planning to file bankruptcy in the near future. But we can’t say we didn’t see this coming. The sub-prime mortgage crisis, the credit crunch, mass layoffs and rising prices for ordinary consumers were just a few signs that something wasn’t right in America’s financial world. Loose lending standards (or no standards), flooding the market with money/credit/debt and inflating home prices well beyond their true value, has created an environment where even the wealthiest and those who should have some financial sense are being forced for file for bankruptcy. But isn’t it funny, that while bailouts are handed out to corporations and bankruptcy for companies are given the nod, when the ordinary consumer needs a fresh start through bankruptcy, suddenly we need to talk about personal responsibility? For anyone who is facing a financial crisis, whether it is because of a personal emergency, job loss, medical expenses or even bad money management, bankruptcy is here to give you the opportunity to start again. Don’t allow anyone to convince you that bankruptcy is "wrong." What is wrong is to allow your financial life to fall apart and not take control of it with the tools provided such as bankruptcy.

Many debtors who are filing for Chapter 7 or Chapter 13 bankruptcy have one or more liens on their personal assets. The most common questions about liens during bankruptcy are 1) What is a lien? and 2) Can filing bankruptcy get rid of a lien? To answer the first question, a lien is a legal interest of a creditor in a particular asset. For example, a lender who has loaned a debtor money to buy a car, has a lien on the vehicle. Filing bankruptcy does not remove any existing liens (including a lien on a car) unless the judge orders the removal of a lien. But, what a bankruptcy will do is eliminate the debtor’s personal responsibility to repay the loan/debt. In the case of a car, the lien holder can still repossess the vehicle after the bankruptcy has been discharged; but the lien holder cannot force the debtor to pay any of the remaining loan balance before or after the car has been auctioned.

If you have a lien against your wages or a bank account speak with a bankruptcy attorney to find out what actions, if any, can be taken to negotiate the removal of these liens.

Before you whip out your credit card or raid your checking account find out what you may be getting yourself into this Xmas season. Check out a few compelling documentaries about crushing debt, sneaky creditors and revealing news about how even regular checking accounts can give you a nasty bout of debtor’s blues this Xmas.

Maxed Out, a hilarious but informative documentary about how Americans are losing the credit battle. It explores the inner workings of our modern financial industry and explains the real reason why the poor are getting poorer and the rich getting richer. 

In Debt We Trust, is another documentary that takes the viewer behind the scenes, exploring how the credit card industry is a multi-billion business fueled by the ongoing indebtedness of the poor and working-class in America.

Overdrawn, is an original documentary that throws light on a little talked about problem of overdrawn bank accounts. The film delves into how the banking industry makes millions of dollars by allowing regular checking/savings accounts customers overdraw their accounts with "overdraft protection" loans. This is one you will probably want to watch BEFORE you do your Xmas shopping.

There are a few myths surrounding the requirements for filing for bankruptcy.

The following are NOT true about bankruptcy requirements:

1. You have to be a US citizen to file for bankruptcy. (FALSE)
2. You must live in the US to file for bankruptcy. (FALSE)
3. You must be a legal US resident to file for bankruptcy. (FALSE)
4. You must be an eligible voter to file for bankruptcy. (FALSE)
5. You must have a Social Security Number to file for bankruptcy. (FALSE)
6. You need to be over 18 years old or of majority age to file for bankruptcy. (FALSE)
7. You must not have a criminal record to file for bankruptcy. (FALSE)

Millions of middle-class Americans know what it’s like to struggle to pay their bills, cover health insurance, daily expenses AND save for retirement. For those in their late 40’s and 50’s, those golden years are fast approaching. Incomes have not kept pace with living expenses and millions of those in the middle-class have depended on debt just to sustain the basics, like a home, car, education, health insurance and a vacation once every 5 or 10 years. Unfortunately, by the time these debtors reach their golden years, they’re saddled with enormous debt. They haven’t put away enough money to cover their debts and a comfortable retirement. This is when bankruptcy becomes an important option in retirement planning. Congress has enacted bankruptcy laws designed to protect Americans’ retirement income from creditors and every debtor in or reaching retirement should take full advantage of these protections offered by bankruptcy.

A Few Things You Should Know

The 2005 bankruptcy reform allows debtors in Chapter 7 or Chapter 13 bankruptcy to continue contributing to their retirement plans, even if that means less money for creditors. The bankruptcy laws also exempt social security income from being counted during the "means test" or from being seized by creditors during a bankruptcy.

f you are a debtor facing mounting bills, you do not have to suffer or neglect your retirement savings to repay debt. Bankruptcy laws recognize that funding retirement is MORE important than paying debt. Talk to a bankruptcy attorney today to find out how you can continue paying into your retirement plan while getting a clean slate with bankruptcy.

Debtors who are deaf or blind may wonder if they can easily file for bankruptcy. Yes, debtors with disabilities have the right to file for bankruptcy even if that disability may encumber them from reading documents or hearing court proceedings. Under the American Disabilities Act the bankruptcy court is required by law to provide an interpreter or legal documents in Braille to you at no cost. Braille documents and/or an interpreter will be provided to you (at no cost) by your attorney before your first bankruptcy court appearance and the bankruptcy court will pay for an interpreter/Braille documents once you go to court.

The Americans Disabilities Act is an important piece of legislation that helps keep bankruptcy accessible to all without regard to ability or physical handicap. When dealing with the bankruptcy court make sure that you assert your rights to have an interpreter/Braille documents so that you are fully aware of what is happening in the proceedings and know all of your rights under the bankruptcy law.

As more and more debtors search for ways to cut their expenses, the number of people representing themselves in bankruptcy cases is skyrocketing across the country. These Pro Se cases are no longer limited to simple small claims against Mom and Pop shops; but many debtors are attempting to go up against some of the most powerful creditors in bankruptcy court. This trend has created chaos in many court systems as courts become clogged with bankruptcy filings done improperly. And debtors totally unfamiliar with complex bankruptcy law slow down the process and create devastating consequences for themselves that are expensive and have long-term implications.

Many pro se debtors filing for bankruptcy unwittingly make mistakes that allow creditors to take advantage of their ignorance and cause their bankruptcy cases to be dismissed or even end up owing more money in the long-run. Any debtor considering filing for bankruptcy pro se should at least speak with a bankruptcy attorney first. Not knowing the bankruptcy law and procedures is like taking a gamble with you and your family’s financial future.

Before the Bankruptcy Abuse Prevention Consumer Protection Act on October 17, 2005, renters facing eviction could file bankruptcy to buy a little more time and try to work things out with their landlord. But now bankruptcy protection from eviction is extremely limited and expensive. If a tenant has lost an eviction hearing and has a "judgment for possession" and wants to use bankruptcy to buy some time, he/she needs to deposit one month of rent to the bankruptcy clerk immediately when filing the bankruptcy petition. But that’s not all, the debtor/tenant must file a “certification” under penalty of perjury which states that the judgment allows the tenant to stay in the apartment/home if the judgment amount is paid in full and that the tenant has deposited with the bankruptcy clerk “any rent which would become due during the thirty (30) day period after the filing of the bankruptcy petition”.

We can stop here because, most "judgments for possession" don’t allow the tenant to stay in the apartment/home even if they pay the judgment amount, plus most people who haven’t paid their rent are delinquent because they don’t have the money to pay. In other words, they don’t have the money to deposit with the bankruptcy court.

During a married couple’s joint bankruptcy, there’s always the possibility that a spouse may become incapacitated or die. The bankruptcy law states that if a debtor is incapacitated or dies, the bankruptcy case does not automatically end. If it is a Chapter 7 bankruptcy and the deceased or incapacitated spouse has not yet attended the First Meeting of Creditors, then someone can testify on their behalf about the deceased or incapacitated debtor’s financial circumstances. In the case of the Financial Management Course requirement it can be waived by the bankruptcy court if the court determines that it would be a hardship or impossible for debtor. If a spouse dies or becomes incapacitated during a Chapter 13 bankruptcy, the court will determine whether the repayment plan can be completed without the debtor, even if it means with less money. If the bankruptcy court determines that the plan cannot be completed without the spouse, it may be converted to a Chapter 7 bankruptcy and discharged.

For example, if the breadwinner of the family becomes ill with a terminal disease and is unable to continue the Chapter 13 bankruptcy because of a lack of income and/or additional medical expenses, the bankruptcy court would most likely review the case and determine that it should be converted to a Chapter 7 bankruptcy.

Chapter 7 and Chapter 13 bankruptcy were designed to help families and individuals protect property, assets and money from seizure by creditors. Whether it’s a home, bank account, a car needed to get to work or wages, bankruptcy is available to give an overwhelmed debtor a fresh start. But what if a debtor has no assets? No bank account, no job and no home? What if a debtor is, what is commonly referred to as "judgment proof"? Is bankruptcy a good option for a debtor like this, a person with no assets? Well, if you’re a debtor with nothing and plan to stay that way for at least the next 7 years or for the rest of your life if you have non-dischargeable debts (i.e. student loans, child support) then bankruptcy is probably not for you. But if you plan to eventually have a job, a home and some money in the bank, bankruptcy is a great option especially if you currently have no assets.

Filing for bankruptcy when a debtor has nothing, can give him/her the opportunity to get on their feet without creditors hot on their heels. After the bankruptcy, the debtor won’t be subject to liens and garnishment of wages when he/she finds a new job or begins to accumulate money in a bank account. But most importantly, bankruptcy will give the debtor peace of mind and freedom from harassment by creditors.

An adversary proceeding during bankruptcy is when someone brings an issue or problem before a judge in an effort to collect damages or have the judge take an action against someone else. There are only 3 parties who can bring an adversary proceeding before a bankruptcy judge; the creditor, the bankruptcy trustee and the debtor.

Usually when a creditor files an adversary proceeding with the bankruptcy court it is usually because they are claiming that a debt should not be discharged because the debtor created the debt through fraud, personal injury or some other reason that would prevent a discharge.

When a bankruptcy trustee files an adversary proceeding with the bankruptcy court, it is sometimes because something was done incorrectly or fraudulently on the part of the creditor or debtor. For example, the bankruptcy trustee may file an adversary proceeding to retrieve money from a creditor that was received improperly from the debtor.

Finally when a debtor files an adversary proceeding against a creditor he/she is usually taking action because the creditor has violated a bankruptcy law such as, ignoring an automatic stay or collecting on a debt that was discharged in bankruptcy.

When a debtor in Chapter 7 bankruptcy dies, what happens to the case? Well surprisingly, the dead don’t get off the hook that easily. According to precedent set by previous bankruptcy cases a debtor can also include the dead. The Chapter 7 bankruptcy case would continue and a judgment will be made based on the available information. If the debtor, who is now deceased, would have received a discharge in life, then he will also receive a discharge in death. Or, on the other hand, creditors may liquidate the estate of the deceased estate to satisfy debts. But if the case is discharged the estate of the deceased cannot be seized and the heirs of the deceased will not be responsible for paying debts in probate court.

According to bankruptcy law, if a debtor receives an inheritance within 180 days of filing for bankruptcy, that inheritance becomes the property of the bankruptcy estate. In this case a debtor will be required to disclose to the bankruptcy trustee and debtors that they received an inheritance. The bankruptcy law calculates the 180 days from the date of death of the person granting the inheritance. For example, if your uncle left you a $100,000; but you did not receive it until 2 years after he died, your inheritance could still become the property of the bankruptcy estate if your uncle died within 180 days after you filed for bankruptcy.

An inheritance receives different treatment in a Chapter 7 than in a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, an inheritance within 180 days after your case was filed, will go to the trustee without any exemptions and will be used to repay creditors. In a Chapter 13, (before or after the 180 days) an inheritance will be used to calculate how much you should pay creditors. But in a Chapter 7 bankruptcy, if the inheritance is received after the 180 day time period, the trustee has no claim to it.

Personal bankruptcies are rising, up 28% from 2007. Over 22,000 Americans file for bankruptcy every week, according to the American Bankruptcy Institute which predicts this number will continue to climb as the nation plunges deeper and deeper into a recession. Those numbers are being pushed upward by a record number of two million people losing their homes to foreclosure in 2008 and an unemployment rate that’s at a five year high with no sign of decreasing.

With a combination of rising job losses, toxic mortgages forced into foreclosure and a slowdown in the economy we can expect to see the number of personal bankruptcies rise far beyond the expectations of any of the analysts. What we need now is a comprehensive bailout program for the average American consumer that will allow them to restructure or eliminate toxic debt without losing their homes, savings and retirement plans.

If you’re filing for Chapter 7 or Chapter 13 bankruptcy, the law does allow the transfer of small customary gifts to family members within one year before filing for bankruptcy. A small customary gift is usually defined as a gift with a value of less than $200. For example, giving your mother a $300,000 house for Christmas would not fall under the "small customary gift" definition; but if you gave your granddaughter a $150 doll house, this gift would probably fall under the $200 value according to the bankruptcy law.

Before you transfer or give anything of value to someone before filing for bankruptcy speak with you Dallas-Fort Worth bankruptcy attorney first. Any property transferred to another person within one (1) year of filing for bankruptcy can be subject seizure by the courts to repay your creditors.

There are thousands of self-employed individuals in the Dallas-Fort Worth area facing financial difficulty; but many of them are under the false assumption that because they are self-employed they don’t qualify under the new Chapter 7 and Chapter 13 bankruptcy laws. Being self-employed does not disqualify you from filing Chapter 7 or Chapter 13 bankruptcy; but it can certainly make your bankruptcy case more complex.

One of the provisions of the new bankruptcy law that makes it especially complex for self-employed debtors to file bankruptcy is the requirement to calculate current monthly income. In bankruptcy cases, current monthly income is defined as the average monthly income for the previous 6 months before the date bankruptcy was filed. For w-2 employees documenting income is easily accomplished with paystubs; but since an entrepreneur’s income can be sporadic and undocumented this rule can be a major headache in the bankruptcy filing.

The remedy for tracking self-employed earnings is a profit and loss statement. But anyone who has ever been self-employed or knows an entrepreneur is quite aware of the fact that most self-employed people don’t keep track their income with P&L statements. Unfortunately, failure to document income will definitely lead to a bankruptcy case dismissal. So, if you’re doing any type of self-employment work you need to begin tracking your income if you’re considering filing either Chapter 7 or Chapter 13 bankruptcy.