What is the best use for funds in our account going into bankruptcy?: My husband just lost his job due to Corona Virus as well as the oilfield problems, so we are not going to be able to pay our bills on top of struggling to find work to replace lost income. Before all this happened we were working on savings and paying off debt so as of now we have a pretty large sum of funds in the bank. But we want to use this to get us through instead of putting it all towards paying bills which will wipe it out quickly. We are planning to try and sell our home and move to Georgia where we have family to help us. So we need the money to facilitate that. What do we need to do?
Rick’s answer:
Take care of you first. Don't use your cash savings to pay any debts. Debts should be paid with cash flow, like your pay checks, especially when future employment is uncertain.
One of the last couples in my office just before San Antonio shut down, told me that they just received a $9,000 tax refund and wanted to use it to get current on their home loan and vehicle loan. Since they were both unemployed, and the slim likelihood of getting employed while everything is shut down for a few weeks, I told them not to use their cash savings to pay the 2 missed house payments and the one missed vehicle payment.
It was a struggle for the husband to accept that advise, so I asked him how he was going to put food on the table and keep the utilities on and gas in the vehicle after the tax refund money is gone and there is still no paychecks coming in. Luckily, his wife was with him during the meeting, as she helped him understand the there was a higher need for the cash than paying a creditor. (They are grandparents that are raising 4 teenage grandchildren full time, so their food bill is high.)
Can a person in bankruptcy get married? If so, does the spouse become responsible for the incurred debt at the time of marriage?: I am currently in bankruptcy and my significant other that has been residing with me for the past three years, and I are wanting to get married. But, I also have other lingering debt in which is student loans pending after the bankruptcy. Would my spouse have to pay my debt in the event of my death? I have three pending policies of which holds my significant other total beneficiary of each policy, so there really is no need to be alarmed in the event of my death occurring. We just wanted to get some clarity of what to do with our situation, and there is just one more question pertaining to this scenario. Would it just be more wise to allow the amount to be paid right off the top of the main life insurance policy to repay the student debt, and keep my maiden last name, although we will be married? I only pray to finish my bankruptcy in this next two and half years as planned. Thanks for any advice you can help with at this moment and your cooperation in this matter.
Rick’s answer: Your new spouse is not responsible for your old debt, under Texas law. However, bankruptcy is federal law, and you look at household income and household expenses to determine the amount of a Chapter 13 plan payment.
What is an "automatic stay" in a bankruptcy?: I understand that a bank or mortgage company can file a motion to lift an "automatic stay" if the homeowner who has filed for bankruptcy misses their house payments. How is this done
Rick’s answer: There is a way to solve the problem of the mortgage company filing a motion to lift the bankruptcy on the basis of missed mortgage payments: you simply have you lawyer reach an agreement with the mortgage company's lawyer that provides for the repayment of the missed mortgage payments. Many times, we can have the missed mortgage payments added to the Chapter 13 plan.