Bankruptcy in Texas
Are you contemplating bankruptcy or hiring a bankruptcy attorney in Texas? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.
Types of Bankruptcy in Texas
Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Texas, to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.
In Texas, bankruptcy cases are handled by specialized Bankruptcy Courts. If you find yourself going through this process, this is where you will file.
Chapter 7 Bankruptcy
Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Texas who can help you to decide if a liquidation plan is right for you.
Typically, individuals approved for Chapter 7 lack stable income. Or they have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions. These could be your home, car, or other valuable assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you to stop temporarily. Foreclosures and garnishments are put on hold. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution, you are still liable for those payments.
Texas Law Help states that chapter 7, or straight bankruptcy, is a legitimate strategy to help you come out from under your debt. The majority of individuals take on debt with the full intention of repaying, but if certain circumstances arise, such as illness or loss of jobs, chapter 7 can be beneficial. However, once your chapter 7 process has ended you must wait 8 years before filing chapter 7 again.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is more complex than other types of bankruptcy. Businesses and certain types of people typically use this chapter. It allows petitioners to restructure their debts with a reorganization plan. This way they are easier to manage over a determined length of time. Typically, this is four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.
The Federal Courts provide an extensive fact sheet online that contains details on how to file chapter 11, its benefits, and its responsibilities. Chapter 11 of the bankruptcy code is basically restructuring, and is exceptionally useful to businesses who are trying to pay off their debts, but do not want to liquidate or lose their business to do so. It gives the debtor a new timeline in which to pay back the debt, and allows the creditors to recoup their money.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Texas after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.
According to Texas Bankruptcy Law, chapter 13 is generally used to protect homes from foreclosure, pay back taxes, and to stop interest from accruing on your account. You can also use Chapter 13 to make up missed car payments, and even protect certain non-exempt items from being seized. People predominantly use this form of filing to protect items that have equity, but do not fall under the exemptions in Texas.
The Bankruptcy Process in Texas
There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation. As well, it can help you get back on track.
In Texas to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.
The Texas State Bar provides a thorough explanation of the bankruptcy process. You’ll need to determine if bankruptcy can erase your debt. As well, which type of bankruptcy will be most beneficial to your set of circumstances. After you’ve discovered if you qualify for bankruptcy find out what property you can exempt and stop paying any qualifying debts. You’ll also need to take a credit counseling class. An experienced attorney in Texas can almost certainly help ease the burden of this process.
Texas Homestead Exemption offers unlimited exemption for property that is 10 acres or less in a city, and 100 acres or less outside the city. While there is no specific amount given as to how much cash can be exempt, there is a part of Texas Statute that declares you can use up to $12, 575 of any portion of a homestead exemption to protect cash. There is also a wildcard exemption that allows you to protect up to $1,325 in personal property.
At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.
Work With an Experienced Texas Lawyer
Hiring a local bankruptcy lawyer in Texas during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case. Especially ones concerning which debts can be discharged or can’t be discharged. An experienced Texas attorney can also offer you guidance to improve the outcome of your case.
Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Texas can guide you through the entire bankruptcy process. We can even help you connect with an attorney across Texas state lines.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!