Bankruptcy Practice Areas and Legal Definitions

Every year, more than 1,000,000 Americans file for federal bankruptcy protection. Some bankruptcy cases are filed by credit abusers and/or the financially irresponsible. The overwhelming majority, however, are filed by hardworking individuals and businesses that fall victim to financial difficulty because they have faced an economic crisis. Bankruptcy is a legal option to help fix such a crisis, and acts as a financial life preserver for those drowning in debt.  To discuss your bankruptcy options, or other options available to you, contact a qualified bankruptcy attorney who can advise you about your rights and guide you through the legal maze of the Bankruptcy Code and the Bankruptcy Courts.

New Bankruptcy Laws:
Bankruptcy is a federal-court process designed to help individuals and businesses eliminate or repay their debts under the protection of the bankruptcy court.  Bankruptcies can generally be described as liquidations or reorganizations. Under a liquidation bankruptcy (Chapter 7), you eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapter 13), you file a plan with the bankruptcy court that details how you will repay creditors.

As of October 17, 2005, the requirements for filing under Chapter 7 changed because of the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are now required take a credit-counseling class within six months prior to filing. In addition, Chapter 7 filers are sectubj to a median income test and possible a means test. The median income test compares your family’s income to the median income of your state. If your income is above the median you are then subject to the means test. The means test is complex mathematical calculation that determines whether there is a presumption that your filing is abusive. Despite all the misinformation about the means test, less than five percent of those filing for Chapter 7 bankruptcy are negatively impacted by the means test.

Those who are negatively impacted by the means test may be better off filing under Chapter 13 instead. In a Chapter 13, you and your creditors agree to a court-enforced plan that requires some or all debts be repaid over three to five years, with an appointed trustee assigned to monitor the repayment process.

Chapter 7:
Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership.  A Chapter 7 bankruptcy case does not involve the filing of a repayment plan as in Chapter 13.  Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay creditors part or all of what they are owed. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets.  In Texas, everything most people own falls into the exempt category. As a result, most people who file Chapter 7 in Texas lose no property at all.

Chapter 13:
A Chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. Chapter 13 permits individuals to keep their property by repaying creditors out of their future income.  It is not available to corporations or partnerships. After completion of payments under the plan, Chapter 13 debtors receive a discharge of most debts.

Foreclosure:
Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (i.e. land and buildings) due to the owner's failure to comply with the terms of the mortgage or deed of trust.  The most commonly violation is failure to make timely payments. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or lien".

A Foreclosure by Sale ends in the posting of a sign advertising the auction of your home on the sale date.  The only ways to stop a foreclosure are full payment of the arrearage, payment of the entire loan amount, or by filing bankruptcy.  Full Payment: If you are able to pay the full amount of your arrearage or loan balance, including fees and costs, you can stop the foreclosure of a standard residential mortgage.  Most people lack the money to make full payment. Bankruptcy: Filing a bankruptcy case will usually stop the foreclosure. This will give you time to come up with the money to pay back the amount on which you are behind. How much time the filing of a bankruptcy will provide you depends on the facts of your case and which chapter of bankruptcy you file.

Bankruptcy Fraud:
Bankruptcy fraud is the crime of filing for bankruptcy with criminal intent. Common types of bankruptcy fraud include hiding assets, lying about your debts, running up your credit card prior to filing, and transferring property into other people’s names in order to hide them from your creditors. Filing bankruptcy multiple times is not automatically fraudulent, but can be fraudulent depending on the circumstances. Bankruptcy fraud is different from bankruptcy planning which is a legitimate way to maximize the benefits of bankruptcy within the bounds of the law. There is often a fine line between good planning and fraud. An experienced bankruptcy attorney will help you to get the most out of your bankruptcy case while still following the law and doing the right thing.

Debt Consolidation:
Debt consolidation is not a loan. Rather, it is a process in which debt is restructured into one monthly payment. It can enable a consumer to reduce the amount owed and thereby eliminate interest. There are many debt-consolidation companies out there. Not all are reputable or have your best interests at heart. Even non-profit companies can take advantage of you. If you choose this route, be careful to choose a reputable company. In some circumstances debt consolidation can be an effective financial planning tool. However, often by the time a person looks into a debt consolidation plan it is too late for a debt consolidation plan to be effective. If more than two of the following signs apply to you, you are probably in too much debt:

• You have begun charging to your credit card essential expenses like food and daily expenditures
• You are making only the minimum payments on your credit cards each month
• You are near the limit of your credit cards
• You have too many credit cards
• You are unsure how much money you owe creditors

Chapter 11:
Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees.

Probate: 
Probate is the legal process of transferring property following a person's death.  Although probate customs and laws have changed over time, the purpose has remained much the same: an individual formalizes his or her intentions as to the transfer of his or her property at the time of death (typically through a Will); his or her property is collected, certain debts are paid from the estate and the property is distributed accordingly.

Wills:
A Will is a written instrument containing directions on how the assets and property of the testator (individual creating the Will) shall be divided upon his or her death.  Wills can also contain instructions regarding the care of minor children, gifts to charity and formation of posthumous trusts.  In order for a Will to be legally valid, the testator must sign the Will in the presence of two witnesses and he or she must be mentally competent and not acting under duress or under the controlling influence of another.

Will Contest Litigation:
A Will Contest is a type of litigation that challenges the admission of a Will to probate.  Issues that are likely to spur the contesting of a Will include: 

• the testator lacked mental capacity, i.e. was senile, delusional or of unsound mind at the time the documents were created;
• the testator was subjected to fraud, coercion or undue influence during its creation and implementation;
• there are ambiguities in the document or
• the Will is a forgery or does not conform to legal requirements as to the number and nature of the witnesses.

If the Will is thrown out, the court, depending on state law and the specific facts and circumstances may disallow only the part of the Will that was challenged; throw out the entire Will, distributing the property as if the person died without a Will or use the last previous Will.

Trusts:
Trusts are estate-planning tools that can replace or supplement Wills and can also help manage property during life.  A trust manages the distribution of a person's property by transferring its benefits and obligations to different people.  Maintaining assets in a Trust often makes it easier to minimize taxes and leave a larger inheritance.  A Trust is also a way to provide a steady income to the Beneficiary over time (as opposed to distribution in a lump sum), thus reducing the Beneficiary's tax burden, allowing the Trust to grow through investment, and keeping assets free from creditors of the Trust beneficiary.  Trusts can also be established for the benefit of charitable organizations.

A Living Trust can be used to hold legal title to and provide a mechanism to manage your property.  You can select a person or persons – often even yourself – as the Trustee(s) to carry out the instructions in the Trust and name one or more Successor Trustees.  Unlike a Will, a Trust usually becomes effective immediately, continues in force during your lifetime even in the event of your incapacity, and continues after your death.  Most Trusts are revocable which allows the person who creates the Trust to make future changes, modifications and even to terminate it.  Trusts also help you avoid or minimize the expenses, delays and publicity of probate.

Living Will:
Living Will or Directive to Physicians is an advance directive which gives doctors and hospitals your instructions regarding the nature and extent of the care you want should you suffer permanent incapacity, such as an irreversible coma.

Probating Estates:
Estates are categorized as probate or non-probate property.  Probate property is property that is transferred by the provisions of a Will.  Non-probate property is property that is either jointly held and passes by right of survivorship, is directed by beneficiary designation such as an IRA or a life insurance policy, or passes according to the terms of a trust.

Estate Planning:
Good estate planning is more than just a simple Will.  It minimizes potential taxes and fees (including Federal and State gift and estate taxes), and sets up contingency planning to make sure wishes regarding health care treatment are followed before and after death.  A good estate plan also coordinates what happens to a home, investments, business, life insurance, employee benefits (such as a 401K plan) and other property in the event of disability or death.

Powers of Attorney:
Powers of Attorney are governed by the law of agency, a branch of common law concerned with the delegation of power from one person (the principal) to another (attorney-in-fact or agent).  When a person becomes incapacitated, the government or the court often steps in and appoints someone to represent and make legal decisions for the incapacitated person.  One of the ways to avoid government or court intervention and the appointment of a stranger to act as your guardian, is to use a Power of Attorney.  A Power of Attorney is a written document that can be limited in scope, or it can allow one person to give another the full power and authority to represent him or her.  There are two types of Power of Attorneys; one covering assets and one covering health care decisions.

Estate Litigation:
Estate litigation is a legal dispute usually initiated by someone who feels they did not receive all they were entitled to in a Will.  Wills can be challenged if it is suspected that the Will is not legally valid or if the person who was writing the Will was wrongly influenced while creating it.

Conservatorship:
A conservatorship is a court order that a person deemed fully or partially incapable be subject to the legal control of another person.  The conservator is responsible for the assets and finances of an incapacitated person.  Many jurisdictions use the term "guardian of the person" to refer to the same legal principle.  It may be necessary to petition a court to appoint a conservator for persons:

• Who have physical or mental problems that prevent them from managing their own financial affairs;
• Who have no person already legally authorized to assume responsibility for them; and
• Where other kinds of assistance with financial management will not adequately protect them. 

Asset Protection:
Asset protection planning involves applying a lawful series of techniques that protect your assets from claims of future creditors. In cases where significant sums are involved, asset protection planning often includes setting up a series of trusts, partnerships and/or off-shore entities to hold legal title to your assets. A future creditor who recognizes how difficult it would be to collect on any judgment it may win, might decide it makes little sense to pursue a claim, and/or be willing to settle for a substantially lesser amount than once commanded.

Medicaid Planning:
Aging clients and their families face troubling issues when confronted with the possibility of financing long-term carefor themselves or for their loved one. Unfortunately, payment for nursing home care is not part of Medicare's basic entitlement package. If one needs nursing home care, one either has to pay for this cost oneself (privately or with long term care insurance), or qualify for Medicaid.

Medicare's nursing home benefit is limited in duration and amount, and covers only skilled care, and then only after hospitalization.  Medicare does not cover custodial or residential care. Medicaid, on the other hand, is a welfare program for health care expenses that does cover nursing home custodial and/or residential care. To be eligible for Medicaid benefits the patient (and spouse, if any) must meet three conditions: one of wealth or resources, one of income, and one of need for assistance. The value of the patient’s countable assets cannot exceed $2,000.

If the patient’s spouse is also seeking Medicaid benefits, the value of their combined or total countable assets cannot exceed $3,000. But if living in the community, the spouse may retain countable assets worth slightly over $100,000. The patient’s monthly income must not exceed approximately $5,000 (or approximately $1,800 to be eligible for at-home help). The income of the community spouse, however, is not a limiting factor and is not taken into account in the patient’s eligibility determination.

Medicaid has additional rules penalizing the transfer (or giving away) of assets, and rules under which Medicaid may seek to be reimbursed for benefits paid after the patient dies. One of the available mechanisms is to impose a lien on the patient’s residence during the patient’s lifetime. Another is to assert a claim for reimbursement  against the estate of a patient when the patient dies. Therefore, without planning, a family can face financial devastation in the event of nursing home placement. There may be insufficient funds for the community spouse or the inheritance intended to be left behind can be consumed and, even worse, a disabled dependent child can be left without supplementary support.

My Firm helps elderly clients and their families avoid some or all of the devastation through application of techniques found in the Medicaid Statutes and Regulations. In short, within the rules, sophisticated planning strategies can be employed and the proper use of these strategies can help preserve precious resources for the community spouse and future generations.

Attorney John Saitis provides skilled legal representation in both administrative matters and litigation.

If you or someone you know anywhere in Texas needs the assistance of an experienced Fort Worth Bankruptcy Lawyer, call John Saitis today at 866-283-8823, or complete the contact form provided on this site to schedule your initial consultation.

Professional Profile

If you or someone you know anywhere in Texas needs the assistance of an experienced Fort Worth Bankruptcy Lawyer, call John Saitis today at 866-283-8823, or complete the contact form provided on this site to schedule your initial consultation.

FIRM ADDRESS:
Law Offices of John Saitis, PLLC
909 W Magnolia Avenue, Suite 6
Fort Worth, TX 76104
Phone: 866-283-8823
Hours: M-F, 8:00AM-5:00PM

MEMBERS OF THE FIRM:

John Saitis

EDUCATION:

• Southern Methodist University School of Law – J.D. – 2001
• Texas A&M University – B.A. History – 1998

JURISDICTIONS LICENSED IN:

• State of Texas
• United States District Court for the Northern District of Texas
• United States Bankruptcy Court for the Northern District of Texas
• United States District Court for the Eastern District of Texas
• United States Bankruptcy Court for the Eastern District of Texas
• United States District Court for the Western District of Texas
• United States Bankruptcy Court for the Western District of Texas
• United States District Court for the Southern District of Texas
• United States Bankruptcy Court for the Southern District of Texas

PROFESSIONAL MEMBERSHIPS:

• State Bar of Texas
• Fort Worth Tarrant County Bar Association
• Fort Worth Tarrant County Bar Association Bankruptcy Section
• Fort Worth Tarrant County Young Lawyers Association
• Tarrant County Debtor Bar Association
• National Association of Consumer Bankruptcy Attorneys