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Tyler Texas Bankruptcy Law Blog

Energy company reorganized, back in business after Chapter 11

There is an all-too-common understanding in business here in Tyler and throughout the country that bankruptcy is the end of the line. Certainly, when business profits shrink, operations struggle and debts take over, something will need to change. But when that change is achieved by filing for Chapter 11 bankruptcy, the business does not necessarily have to call it quits altogether.

Take the example of the once-major renewable energy player SunEdison. Major spending on acquisitions, coupled with multiple lawsuits and a nosedive in stock prices, lead the company to file for Chapter 11 bankruptcy in early 2016. Through the Chapter 11 process, SunEdison sold off over $2 billion in assets. This enabled it to reach settlements with its numerous creditors and other parties with a financial stake in the company.

Reorganization under Chapter 13 bankruptcy

Although it is often the last thing that a debtor wants to consider when they are facing insurmountable financial challenges, bankruptcy is an excellent option for many people who want to be in control of their loans and other financial obligations. Texans have several options for bankruptcy that may allow them to receive judicial discharges of their debts and, depending upon the form of bankruptcy that they choose, the process of reaching a discharge can look very different.

Under a Chapter 7 plan a debtor must sell off or liquidate items of property that are not exempt under the bankruptcy rules. The proceeds of the property sales then may be applied to the debts the individual holds with their creditors; this will allow a debtor to achieve discharge under Chapter 7 bankruptcy.

Exemptions under Chapter 7 bankruptcy

Chapter 7 bankruptcy, also known as liquidation bankruptcy, permits a debtor to sell of items of property in order to satisfy their outstanding obligations to their creditors. Some Tyler residents may be wary of this process as it may seem as though they will be left with nothing once their financial obligations are fulfilled. However, through the permissible use of property exemptions a debtor may protect certain items of property for their lives after they have received their Chapter 7 discharges.

There are limits on what property may be exempt under the Chapter 7 bankruptcy rules. A debtor that owns two homes, such as a primary residence and a vacation property, may not be able to retain both properties throughout bankruptcy process. Additionally, a person who owns expensive items of personal property, such as artwork, heirlooms and jewelry collections may not be allowed to retain those items if they want to fulfill their debts to the creditors.

Bankruptcy may be the missing item in your financial toolbox

Living in Texas definitely has its pros and cons, same as any other state. You've likely heard humorous remarks about everything being "big" here. The trouble is, not everything that's big is good; for instance, big health problems, marriage problems or financial problems are anything but good. When big financial problems arise, it can have immediate and long-lasting negative effects on your life. Perhaps none of this is news to you because you are currently trying to overcome a particular financial crisis.

Maybe things have gotten out of hand due to losing your job or facing an unexpected medical emergency. Then again, perhaps you're still employed and in good health, but you got into a bad habit of spending more than you earn. Regardless of the exact reasons for your money trouble, if a lender is threatening to take ownership of your home, you'll likely want to access all options available to halt the process.

Watch out for phantom debt collection scams

Tyler residents struggling with consumer debt may be familiar with some of the tactics that debt collectors use. These all too often cross the line from the legitimate exercise of creditors' rights into harassment, even threats. Making matters even more complicated and disturbing is the fact that the information about one's debt relied upon by collectors may be incorrect or even completely made up.

A few years ago, a man living in the northeastern United States received a call from a collector concerning a debt that the man knew he did not owe. The caller became angry, threatening violence against the man and even threatening to rape his wife. The man was so upset by the call that he became determined to track down the caller and the company employing him and confront them.

Helping clients understand the limits of their creditors' rights

Sometimes, Tyler residents struggling financially reach a point where it feels like they have no control. The tactics that creditors use against you feel invasive, demoralizing and infuriating and it seems they can get away with just about anything they want.

Take the example of bank account seizures. You may be working long hours at multiple jobs to try to pay your bills, to try to play by the rules. But suddenly, the money that you scrape together to put into your bank account is being taken right back out by someone else: your creditors.

Default on student loan in Texas, lose your professional license

A phrase with which Tyler residents struggling with financial challenges will likely be all-too-familiar is "pull yourself up by your bootstraps." The idea that one should simply work more - longer hours or an extra job - to pay off debt is hard-wired into many minds. But especially for individuals struggling with student loan debt, working may actually become more difficult or even impossible.

The reason for this is that Texas is one of 19 states where failure to keep current on student loan payments means that an individual could lose a professional license issued by the state. This includes anyone from nurses, firefighters and teachers to lawyers, realtors and psychologists. Without a license, these professionals cannot work and earn income and unemployment in turn makes debt payments increasingly difficult.

How does Chapter 7 compare to Chapter 13 bankruptcy?

It can happen to even the most fiscally responsible person. Sometimes a financially catastrophic event occurs -- a serious illness, a job loss, a divorce or another major life event -- that makes it difficult if not impossible for a person to pay their bills. It is not pleasant to be in a situation where a person has to decide which bills to pay (or not pay) and still keep food on the table and a roof over their head. Fortunately, people in Texas and across the nation who are drowning in debt may be able to file for bankruptcy.

One option for filing for bankruptcy is Chapter 7 bankruptcy. Last year, over 490,000 individuals filed for Chapter 7. In this type of filing a person's property is liquidated and the proceeds are used to pay their creditors. After this the court will discharge many of the person's debts. People may worry that they'll be left with nothing after a Chapter 7 filing, but there are exemptions for certain pieces of property that will not be liquidated.

Safeguarding your financial future by knowing the causes of debt

The burdens of debt can place you under a significant financial weight and may leave you with concerns about your financial future. If you are experiencing prolonged periods of monetary hardships, you may also be suffering a lesser quality of life in the process, potentially prompting a need to seek relief.

Your search for relief may also have you wondering how you got to this point in the first place. Although this may seem like a pointless query at first, understanding the most common causes of monetary hardships could prove exceedingly beneficial in your efforts to protect your financial future.

Chapter 13 can help those facing financial hard times

Any person in Tyler, Texas could sometime find themselves facing financial hard times. It is not easy to choose between paying your bills, putting food on the table or gas in the car. Eventually the debts add up to the point where paying them off simply is not possible. This can be a devastating blow, one that is made all the more stressful and frightening when debt collectors start calling or foreclosure is threatened.

Fortunately, there is one road a debtor can take that will put a halt to debt collection and foreclosure proceedings: filing for bankruptcy. However, debtors may be concerned that if they file for bankruptcy they'll have to give up their homes, their cars and their personal possessions. Fortunately, there is a certain type of bankruptcy -- Chapter 13 -- that does not involve the liquidation of assets.

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Law Office of Gordon Mosley

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Tyler, TX 75703

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