Financial problems can make you feel as though the entire world is crashing down. It frequently induces overwhelming feelings of sinking in quicksand or drowning in the ocean. Sometimes, though, the financial problems you are experiencing are simply out of your control. When that happens, one solution you may look for is to file for bankruptcy.
Choosing this route does not imply that you are a bad person or a poor decision-maker. Whether it is because of bad luck, a sudden loss of employment, a serious illness, or even a divorce, there are many ways that financial troubles can impact good people. Once the pressure begins to mount and the creditors start calling, it takes a serious toll on the physical and mental well-being of anyone who experiences it.
While sharing your financial troubles with others can be difficult, it is important to understand that you do not have to face this experience alone. With the help of a knowledgeable and experienced bankruptcy lawyer, like those at the Steele Law Firm, you can get the help and support you need to bring your head above water again. With our help, we will look at your unique situation and discuss the pros and cons of the decisions that are available.
When bankruptcy laws were established, they were designed to give people who found themselves in financial trouble a way to hit the reset button and essentially "start over." When a person declares bankruptcy, they liquidate their assets to pay debts or establish a very specific repayment plan. It allows those who have fallen into debt a way to reduce the amount they owe or to completely erase their debts.
This may seem appealing enough, but the decision to move forward with bankruptcy can be a difficult one to make. While the benefits are vast, there are other factors that you should consider, such as the impact on your credit score. There are also additional costs associated with the process, both in time and money.
There are two types of bankruptcies you can file, and both offer different solutions.
Chapter 7 bankruptcy is the most common type of bankruptcy filing. It is often used by those who own small businesses or individuals who are unable to pay their bills because of overwhelming debts. When filing Chapter 7, the goal is to try and permanently eliminate the debt that is owed. It only applies to certain types of debt, however, such as credit cards, payday loans, or bills.
Sometimes referred to as a "straight bankruptcy" or a "liquidation," a Chapter 7 bankruptcy does not just cancel debt. A court order may require you to sell other assets you own to partially pay the creditors for the debts that are owed. The assets that are directed to be sold must be considered non-exempt. When property is considered exempt, it is protected by state law against liquidation. Texas law protects assets such as:
In Texas, most property is considered exempt, which means that when you file for Chapter 7 bankruptcy, the loss of assets is very minimal. There are other benefits of Chapter 7 bankruptcy:
However, there are disadvantages to consider when filing for Chapter 7 bankruptcy:
While Chapter 7 bankruptcy is used by most who are seeking bankruptcy, Chapter 13 bankruptcy offers an alternative form of filing. It is more appealing to those with higher incomes, who can likely pay all or a portion of their debts. Often, Chapter 13 is used when a person wants to catch up on debts such as car payments or eliminate certain liens on a home. Unlike a Chapter 7 bankruptcy, there is no risk to your properties, as you can keep all your exempt and nonexempt properties. Chapter 13 creates payment structures that help make paying the debts owed more manageable and can sometimes adjust or reduce the amount that is owed. Determining what that looks like is dependent on your income, expenses, and the type of debt you owe.
Repayment plans organized under a Chapter 13 bankruptcy will be structured to be complete within 3 to 5 years. They must meet the following guidelines:
Chapter 13 filing payments must begin within 30 days of filing. There are several advantages to filing Chapter 13:
However, Chapter 13 has a few disadvantages:
Deciding which type of bankruptcy in Plano, TX is right for you is a discussion that you should have with your bankruptcy attorney.
Knowing what to expect when you file for bankruptcy can help you prepare for the process. After filing takes place, creditors are not allowed to pursue collections against you, including garnishing wages, foreclosure, or repossession. This remains in place until your case is resolved.
You will be required to take a credit counseling course within 180 days prior to filing. This course must be state-approved, and you will need to produce a certificate of completion.
You will need to attend a meeting with your creditors, known as a 341 hearing, at which they will have the opportunity to ask you questions about your case. You should be prepared to provide documentation in reference to questions they may ask.
Once you have completed the process, the bankruptcy will be finalized, and you can begin the process of financially starting over under the agreed-upon terms.
A: The short answer is no; a lawyer is not required to file bankruptcy. However, without the help of a legal expert, you may make mistakes in the process, fail to meet filing requirements, or forget steps that could cost you more later. The best course of action is to seek the help of an attorney who specializes in bankruptcies who can help guide you through the process.
A: Each situation is unique, and costs can vary depending on the details of your case. However, the average for a Chapter 7 bankruptcy case is between $800 and $2,000. Factors that play a role in costs include an attorney’s experience, the location of the filing, and how much time is required by the attorney. If you are filing for Chapter 13, the costs are likely to increase because the process is more extensive.
A: Your median income level determines your qualifications for bankruptcy. In general, if your income falls below the median income level, you will qualify for Chapter 7 bankruptcy. The median income level in Texas is set at $39,673. If your income is above this amount, you will likely have payments deducted from secured debts.
A: Both forms of bankruptcy have different filing fees. If you file Chapter 7, the fee is $335. The fee is $310 for Chapter 13. While one costs less, deciding which is the right choice for you should be determined with the help of an attorney. They can look at the circumstances of your case and guide you toward the best decision.
Financial troubles can be difficult, particularly when they make you feel like there is no way out of them. If you are in this situation, get the help of a trusted, experienced, and knowledgeable bankruptcy expert. At the Steele Law Firm, we have the answers to your questions and can help you make the best decision for the financial future of you and your Plano, TX family. Contact our offices today and let us help you find the relief you need.
