I live in Williamson County. If I file bankruptcy would I go to a court in Austin or Georgetown?

Patti G.
Georgetown, TX

You would go to Austin. The US Bankruptcy Court for the Western District serves the following counties: Bastrop, Blanco, Burleson, Burnet, Caldwell, Gillespie, Hays, Kimble, Lampasas, Lee, Llano, Mason, McCulloch, San Saba, Travis, Washington, and Williamson. You can find more information on the website for the US Bankruptcy Court for the Western District of Texas.

I have a quick custody question for you: my wife and I are about to get divorced and I'm worried that I won't get custody of the kids. If I don't, how often will I be able to see my children?

Glenn A.
Austin, TX

You and your wife can agree to any custody schedule you like. If you are unable to agree on a schedule, Texas has a "Standard Possession Order" that provides for the person who does not have the children to have possession of the children on the 1st, 3rd and 5th weekends of each month, plus Thursday evenings during the school year and a month in the summer.

My brother and I are starting a business and are strapped for cash. How do we avoid incurring a ton of legal expenses?

John B.
Austin, TX

Unless you have a lot of personal assets that you want to protect that can't be stashed in exempt buckets like IRA's, home equity etc., you probably don't need to incorporate and hire a lawyer before you rent office space, get a phone line, print business cards, and offer, say, consulting services. Just do it.

Unless you are going into a regulated industry such as food service, child care or the like, don't worry about getting a lawyer right away and just make sure there's really a business opportunity and that you can close deals. If not, you don't need to mess with the legal stuff anyway. Once you've sold something, you'll have revenue, energy and a reason to get the legal stuff right. Don't let the legal worries become a distraction.

When you do start working on it, don't try to jump through every legal hoop at once. If your full time job becomes filling out forms, your business will fail. Do only the bare minimum, worry only about the things that will really hurt you. Here's a tip: unless you have a lot of assets sitting in the bank or are making a lot of taxable income, very few things will really expose you to much risk in the first year.

Wait to hire employees as long as possible. Hiring employees makes the legal side much more complicated. Note: contractors can come in and do project work for you any time.

Once you're ready to get a lawyer, make sure you find the right one. Find a lawyer who will answer basic questions for free. You shouldn't have to pay $100 to get a simple question answered. You want a lawyer who doesn't start the clock unless he has to draft docs or do research, and who is willing to give you a low hourly rate (under $200/hour) and bill his time conservatively until you get on your feet.

If you have some free cycles, ask your lawyer to point you in the right direction and let you do things yourself to keep costs down. For example, you can probably figure out how to incorporate yourself and modifying a form of NDA isn't rocket science.

What are some of the changes to the bankruptcy law that are about to take place? When will these changes take effect?

Ray M.
San Marcos, TX

The changes to the bankruptcy code are effective October 17, 2005. The bill has many features, but here are a couple of the key changes:

Lawyers must sign a statement that they have done "an investigation" and don't know of any falsehood in your bankruptcy petition. Some feel this may require your lawyer to pay for an asset check to be performed on you by a private investigator. That would add to the cost of filing bankruptcy.

Also, if you make over the median income for your state (approx. $39,000/year in Texas), you can't file a Chapter 7 bankruptcy unless you meet a strict means test (i.e. you have just enough income to buy basic food and shelter). In applying the means test, the average income over the past six months is used, regardless of present actual income.

So in all likelihood, you will have to file a Chapter 13 bankruptcy. When you do, this same means test will be applied, and every dollar above what is required to provide a subsistence living for yourself will be taken and given to your creditors for the next five years.

For more info about these changes to the bankruptcy laws, see the Lawyers.com Bankruptcy Law Changes writeup.

Some of my debts have now been turned over to a collection agency. Can the collection agency add interest to my debt?

Naveen J.
Round Rock, TX

Yes, the collection agency can add interest to your debt. The Federal Debt Collection Practices Act allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings or the addition of such interest is allowed under state law. Every state authorizes the collection of such interest.

What is the difference between Chapter 7, Chapter 11 and Chapter 13 bankruptcy?

Karyn A.
Austin, TX

They refer to different parts, called chapters, of the bankruptcy law. Individuals may use Chapter 7 or Chapter 13. Chapter 7 bankruptcy gives you a fresh start by discharging your unsecured debts (such as credit cards and medical bills). It is sometimes called liquidation. Businesses may used Chapter 7 bankruptcy to liquidate or Chapter 11 bankruptcy to reorganize their business and repay their debts over a period of years under a "plan." Business that want to continue as going concerns must use Chapter 11 bankruptcy.

My husband and I are about to have our first child and we'd like to get a will. Why shouldn't we just use one of those do-it-yourself kits?

Anne P.
Round Rock, TX

The form kits for wills, living wills, etc. are very simple. If your situation is simple that may work (e.g. you are single, have no kids, don't have a lot of assets, don't have any special needs or disabilities, etc.) But if your situation is even slightly complex, it's important to have a will or living will crafted to fit your situation.

Keep in mind that when you consult with a lawyer, what you are paying for is not the form used, but the personalized advice and counseling that goes along with it. I'll give you an example of something a good lawyer might point out during an estate planning meeting:

If you have minor children or may have children any time soon, you should include a testamentary trust to hold any assets they inherit if you and your spouse both die. This avoids having to run their assets through the Probate Court which is time consuming and expensive. It also allows you to control things like:

• Who serves as trustee for your children
  
• How much is paid per month to the family who raises them
  
• The age at which your children get free reign over all of their inheritance
  
• The purposes for which the principal balance of their inheritance may be pulled out early (college tuition or medical needs, for example)

This is just one example and, as you can see, this sort of legal and estate planning advice goes beyond what you'd find in a do-it-yourself will kit.

I just moved to Austin from North Carolina and my wife and I have decided to get divorced. Can I get divorced in Austin?

Alan P.
Austin, TX

Before you can file for divorce in Austin, either you or your spouse must have lived in Texas for six months and in Travis County for the preceding 90 days.