Debt Discharged in 90 Days?

Dallas - Ft. Worth Attorney Explains Chapter 7 Bankruptcy

Video Transcript:

David Shuster: 

It's something that anyone that's in a tough situation with debt ought to take a hard look at.

Rob Rosenthal: 

If you're suffering under the weight of your debts, is it possible you can see relief in as little as 90 days? And how can you do that? We're gonna find out right now, because that's what we're gonna ask on this episode of Ask The Lawyer. My guest is Dallas attorney, David Shuster. I wanna remind you right up front, if you wanna ask David any questions about your situation, it's easy go to askthelawyers.com. Click the button up at the top that says Ask a Lawyer it'll walk you right through the process, or you could just call the phone number you see on the screen during our conversation. David, it's always good to see you, thank you for helping us out.

David Shuster: 

Yeah. Thanks, I'm glad to be here.

Rob Rosenthal: 

So is it possible that someone can file bankruptcy and have unsecured debt cleared in as little as three months and how does that work?

David Shuster: 

Yeah, that's exactly right. It's the Chapter 7 bankruptcy. It is the best get out of debt plan available. It's not available to everyone, but it's available to a lot of people, and it only takes 90 days from start to finish. The hearing is by telephone, and so you talk about if you're in a situation where you're losing sleep, you have a lot of debt, you're getting threatening phone calls, and you could eliminate it all within 90 days in a very predictable process where you can find out if you're actually going to have to give up any property before you get your discharge of debt ahead of time. And it's just... It's something that anyone that's in a tough situation with debt ought to take a hard look at.

Rob Rosenthal: 

Absolutely, so maybe just a little definition, explain the difference between secured debt and unsecured debt.

David Shuster: 

Yeah, so a lot of people worry about, well, if I file bankruptcy, I'm gonna lose my car or something is gonna go wrong with my house. Now with a secured debt for an exempt asset, like a home or a car or even personal belongings, if you have a secured debts, then they’re attached, the debt is attached to collateral, where a creditor has a right to come in and re-take that collateral. Whether it's through a re-possession or foreclosure or some sort of seizure. Okay?

Rob Rosenthal: 

Hmm-hmm.

David Shuster: 

As long as you're making those payments then your collateral, your car, your home, etcetera. Jewelry, whatever, if it's a jewelry loan are not exposed. You're not gonna lose those things, it's the same as if you were not in bankruptcy, if you didn't make the payments, then they're gonna wanna retake the collateral. It's the same if you file a bankruptcy, if you don't make the payments then when the bankruptcy is over, you get that 90-day automatic stay, when the bankruptcy is over, they're gonna wanna retake the collateral. So unsecured is basically everything else from a medical bill to credit card debt is the most common example, any loan, some loans will claim to be for secured with furniture, but often are not.

David Shuster: 

Some are, and it's mostly credit card debt, so it's any debt that you have outstanding that's not attached to an asset, and so the Chapter 7 bankruptcy should really be looked at as business as usual for the household, but without all of the unsecured debt after 90 days.

Rob Rosenthal: 

And without getting too deep in the weeds, student loans kind of fall in neither one of those categories?

David Shuster: 

Well, good question, I'm glad you brought that up. Rob, student loans are technically unsecured, they're in a unique category because they're unsecured, but they fall under one of those exceptions to the bankruptcy discharge, right now. And so a student loan debt is excepted from the bankruptcy discharge. So that debt will not be eliminated in Chapter 7. Certain jurisdictions allow for hardship discharges of student loan debt, that's something that you should discuss with an experienced attorney specific in your jurisdiction. But, yeah that's... General rule, where I practice, it's a tough exemption to meet and yeah, the student loans... But if you have all this, it's funny because student loan debt is so high, it's so astronomical, and I could be talking to a client that has $50,000, $60,000 of credit card debt, and they say, oh yes, but I also have $60,000-$70,000 in student loan debt. At least if you discharge your credit card debt, you can focus on the student loan debt and maybe one of the many administrative programs that are available to help you address that student loan debt. Currently, though Chapter 7 is not gonna help out most people in my jurisdiction with outstanding student loan debt.

Rob Rosenthal: 

Let's talk a little bit about how this happens in 90 days, you mentioned the court hearing can be over the phone, is there a credit counseling that has to be gone through or anything like that?

David Shuster: 

Yeah, it's extremely simple process, the credit counseling is what I call an online rubber stamp. Okay, so you don't have to even talk to anybody, there might be some chatting back and forth that's required during the online rubber stamp, but it's sort of a click-through question and answer process. Working with my office or any other attorney's office, you're basically gonna be submitting a packet that discloses your financial information, which you own. Good thing about working with an attorney that's filing Chapter 7 bankruptcies, is submitting all the documents to the attorney, if your attorney like our office, should have a conversation. I talk to all my clients before I go live with the petition to make sure that we have all the information correct, we're not missing an asset. If there is an asset that is not exempt, like they might lose it in the bankruptcy. We have a detailed conversation before we file, basically hit the pause button and sell the asset, use the funds from the sale in an acceptable manner, you talked about that with your attorney and then file bankruptcy. So nothing wrong with that. So yeah, it's a process that requires honest disclosure that you're swearing to things, this is everything I own, etcetera, but it's not a rigid process that doesn't allow for you to, you know through your attorney, adapt it to your situation. In other words, I talk to clients that have extra cars, extra things, and that can't even afford to pay the attorney fees, so they'll sell their things to pay the attorney fee. They'll sell their assets, maybe have a necessary home repair that needs to be addressed right away. They'll do that first, and then three, four, five months later, then do the bankruptcy. So it may seem like, Oh, I gotta do something now, but really just getting that relationship with the attorney to find out, to lay out a map of time, basically, it's like sort of a mental time travel that we all should engage in and do engage in, thankfully that helps our species evolve. But the mental time travel is like, okay, if I do this, this, this and this, then this will happen and I'll be out of debt at this time...

Rob Rosenthal: 

Right.

David Shuster: 

As opposed to just not having a plan, sweeping this stuff under a rug, hoping you're gonna get a good settlement, hoping you're gonna somehow get a bonus that's gonna pay off this debt or that debt, when instead you should be using that money potentially to save for kid's college education, home repairs, and just having a savings.

Rob Rosenthal: 

So hoping to hit the lottery maybe not the best plan, David?

David Shuster: 

Not the best plan. Yeah, I did have a client recently, they did hit the lottery, before COVID and used the money when they were not employed. But, yeah, that's a rare occurrence that... Yeah, please have a plan, talk to an attorney and have a plan, don't be afraid of the word bankruptcy.

Rob Rosenthal: 

Right.

David Shuster: 

It's just a word and the connotation that just... People conjure up bad things, if you don't know what it is and what it can do for you. So don't be afraid of that word.

Rob Rosenthal: 

What is the reaction you usually get from people when you talk to them and you explain to how now they could get out from under this unsecured debt in as low as 90 days? What sort of reaction... 'Cause there's such stress involved with having this much debt.

David Shuster: 

Well, it's just... People that don't... Aren't aware of what bankruptcy can do...

Rob Rosenthal: 

Right.

David Shuster: 

Very often their first statement is, well, I don't wanna do bankruptcy. It's like, okay, well, why not? And it's like, I... I just don't wanna do it. And so, it's a learning process where they're having to find out, and again, engage in that mental time travel to learn the facts about what it can do for me. And oh, you're telling me... I always like to lay out a map of, okay, well, if you hire me today and you're able to pay my fee by this date, then... 'Cause we offer payment plans and then we can help you deal with this one creditor that's breathing down your neck, and then in June, we can file, okay? And then, by September, you'll be debt-free. You can purchase that car that needs to be replaced by the end of this year. And so you just educate the client...

Rob Rosenthal: 

Right.

David Shuster: 

And so the client is often, to answer your question, very relieved when they find out, wait a second here. Okay, so after the summer time, I'll be able to walk in and get a car and I won't have any credit card debt and my score will be back to a, potentially a, 700 or higher? Yeah, that sounds like a pretty good deal. You don't walk around with a label on yourself saying that you filed bankruptcy. Nobody...

Rob Rosenthal: 

Right.

David Shuster: 

Really knows unless you're going out to look for some credit in the... But again, with such a short time frame there, you're gonna be a good credit risk within about six months of starting the process.

Rob Rosenthal: 

All really good information, David. Thank you so much for sharing with us. I think you've probably helped a lot of people today.

David Shuster: 

Good. I hope so. I appreciate it.

Rob Rosenthal: 

That's gonna do it for this episode of Ask The Lawyer. My guest has been Dallas attorney, David Shuster. I remind you, if you wanna ask David questions about your situation, go to www.askthelawyers.com, click the button up at the top that says "Ask a Lawyer," it'll walk you right through the very simple process. Doesn't cost anything to ask your questions. Thanks for watching. I'm Rob Rosenthal with Ask The Lawyers.

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