If you are overwhelmed by debts and looking for a solution, you may be considering whether filing bankruptcy is right for you. Bankruptcy allows you to resolve debts and start fresh with your finances. The process of bankruptcy falls under federal law, but there are specific exemptions that apply to those who file in Texas. Filing for bankruptcy is a complex and detailed legal process, so the support of an attorney can be helpful to avoid mistakes or delays.
In Texas and the United States, Chapter 7 and Chapter 13 are the most common types of bankruptcy that individuals file. Understanding the difference between the two is important before you file, as there are significant differences between them. Not everyone qualifies for both types of bankruptcy, and they each resolve debt in a different way. Depending on your priorities and financial circumstances, there are reasons to choose one over the other.
Chapter 7 bankruptcy is known as liquidation. You must meet certain income requirements to qualify for a Chapter 7 filing. When you file for Chapter 7 bankruptcy, creditors are required to stop attempting to collect debts and will eventually discharge, or erase, qualifying debt. This occurs after any nonexempt assets are sold and profits are used to pay creditors back as much as possible. Therefore, Chapter 7 bankruptcy tends to work well for those with minimal assets, as you don’t have much to lose.
In Chapter 7 bankruptcy, a trustee is appointed to sell your nonexempt properties to attempt to pay creditors as much of your debts as possible. Depending on how long you have lived in Texas, you can use federal or state exemptions to keep some of your property. You could qualify for the following exemptions to avoid losing assets when filing for bankruptcy:
This list is not exhaustive, and the exemptions may not apply to all Texans. An Azle lawyer experienced in bankruptcy law can explain the exemptions to you and help you determine which ones you qualify for. Exemptions are not automatic, so you must know specifically which ones to ask for, or you will risk those assets being sold to repay debts.
When you successfully file for Chapter 7 bankruptcy, most unsecured debts will be discharged. This includes credit card debt, medical bills, overdue utility bills, and personal loans. If you have secured debts that are attached to an asset, such as a mortgage or car loan, you might have the option to keep the asset and catch up on payments.
Unfortunately, filing for bankruptcy doesn’t discharge all your debts. Debts that aren’t typically discharged in Chapter 7 include:
As with most major life decisions, deciding whether to file for Chapter 7 bankruptcy comes with pros and cons to consider. Some positives of filing for Chapter 7 bankruptcy include:
Where there are positives, there are often negatives, so don’t forget to consider the possible cons of filing Chapter 7 bankruptcy:
Chapter 7 bankruptcy is a fairly quick process that can typically be completed within six months of filing. If you have been attempting to chip away at debts and consistently failing to make your payments, it may be time to consult with a bankruptcy attorney to discuss how the pros and cons apply to you. Constant harassment from creditors and working tirelessly to barely make a dent in your debt can be exhausting. Contact us today to let us help you determine what steps to take to begin your journey to better financial health.
If you have many assets or too high of an income to qualify for Chapter 7, you may want to consider Chapter 13 bankruptcy to avoid losing your property. Chapter 13 bankruptcy consists of the reorganization of debts, which allows you to keep your assets but requires you to stick to a payment plan for up to five years to pay back at least some of your debts. The monthly payment amount depends on your earnings, the types of debt owed, and the amount of property you own. Once the plan’s term is finished, the remaining debt that was part of the bankruptcy plan will be discharged, and you can start fresh with your finances at that time.
If your income is too high to qualify for Chapter 7 bankruptcy, or you are not willing to part with your assets, you might be considering filing Chapter 13 bankruptcy. While keeping your assets is one obvious positive, there are other pros and cons to consider. Pros of filing for Chapter 13 bankruptcy include:
Cons to consider when filing Chapter 13 bankruptcy include:
You are not required to hire a lawyer when filing bankruptcy, but many people find it difficult to file correctly without guidance. An experienced bankruptcy lawyer, such as those at Steele Law Firm PLLC, can help from start to finish. We start with a consultation where we can lay out your options. We do not push for bankruptcy, and we will look at other debt resolution options outside of bankruptcy to see if they apply to you. Regardless of the path you choose, we can guide you through to a resolution of your case.
Filing for bankruptcy is a very form-heavy process, and any errors or omissions can lead to delays or the unnecessary loss of assets. Texas law allows for specific exemptions while filing bankruptcy, and our attorneys can ensure you ask for the exemptions you qualify for. Going through the process alone can be stressful and lead to unexpected delays and outcomes. If you are struggling to get out of debt, contact our office to set up a consultation and learn how we can support you in this difficult time.
The first step in the filing process is to determine which type of bankruptcy you’re filing for —typically Chapter 7 or 13. Once you have made that decision, it is time to gather documentation about your financial information. This includes:
Additionally, the bankruptcy trustee might ask for:
After you gather the necessary documentation, you will need to prepare a bankruptcy petition, which must provide a completely accurate picture of your financial situation. A qualified lawyer can help you with this process to ensure everything is completed accurately. The petition will describe your financial situation and include an inventory of your household property and its value, billing statements for debts, credit reports, and proof of credit counseling completion.
After filing, you are required to attend a “Creditors Meeting.” All of your creditors have a right to attend this meeting, though most don’t attend. If they are in attendance, creditors may ask you about your financial situation and the documents you submitted with your petition. The bankruptcy trustee will also be in attendance and will verify your identity and ask you basic questions about the documents you filed. An attorney can help you prepare for the meeting and let you know what types of questions to expect.
If the Creditors Meeting goes smoothly, your documents were submitted correctly and accurately, and there are no objections filed, you will be eligible for your debts to be discharged. This means you will no longer be liable to pay the debt.
If you are filing Chapter 7, the discharge typically occurs within six months of filing. If you file for Chapter 13 bankruptcy, the discharge of debt will occur after you have fulfilled monthly payments on your confirmed repayment plan — which is between three to five years from the filing date.
The court could deny your bankruptcy case if your petition and supporting documents are submitted with inaccuracies or omissions. You could be considered ineligible for debt discharge under the following circumstances:
Some people feel ashamed or embarrassed when they find themselves in financial trouble that requires them to file for bankruptcy. This can lead to trying to make things look better than they seem, but that is not a wise decision when it comes to filing for bankruptcy.
If you purposely hide information from anyone involved in your case, you could lose the ability to get your debts discharged. It is crucial to be honest with your attorney and the bankruptcy court throughout the process of filing for bankruptcy.
Lack of attention to detail by your attorney could also lead to a denied bankruptcy case. Therefore, it is important to ensure your lawyer is experienced in the intricacies of the filing process and bankruptcy law.
At Steele Law Firm PLLC, we specialize in bankruptcy law and are knowledgeable about the process in the state of Texas. We help you gather all the necessary documentation and ensure your petition is comprehensive before filing the bankruptcy petition. Additionally, our team is aware of the exemptions available to Texans and can make sure you do not give up any assets unnecessarily during the bankruptcy process.
Steele Law Firm PLLC is here to help in your financial time of need. We are a debt relief agency that has helped hundreds of clients since 2009. We pride ourselves on treating each case individually without using a cookie-cutter solution.
If you are having a difficult time meeting monthly payments and are being contacted by debt collectors, contact our office today, so we can assist you in determining the best plan of action. If you are already beginning the process of filing for bankruptcy in Fort Worth and have special circumstances or are finding the process too difficult to complete alone, we are ready to help. You have options when it comes to financial hardship, and we are ready to support you as you figure out how to start fresh.