What Is The Downside Of Filing For Bankruptcy
There are several disadvantages to filing for bankruptcy. Although the bankruptcy system provides respite to persons with heavy debt, interested petitioners should be mindful of the following downsides.
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Is Chapter 7 Bankruptcy Right For You
Make sure you know the difference between Chapter 7 bankruptcy vs Chapter 13 bankruptcy. Chapter 7 makes sense when:
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You dont have many assets.
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Your problem debts total more than 50% of your annual income.
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Your problem debts can be discharged, or forgiven, by Chapter 7. These include debts such as medical bills, credit card debt and personal or payday loans.
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It would take five years or more to pay off your debt, even if you took extreme measures.
Some debts typically cant be erased in bankruptcy, including recent taxes, child support and student loans. Bankruptcy still may be an option for you, though, if erasing other kinds of debt would free up enough money to pay the debts that cant be erased.
The other common form of consumer bankruptcy, Chapter 13, may be better if you have more assets or secured debts, and can repay some or all of what you owe.
Other debt relief options are available, too, such as a debt management plan through a agency. Take advantage of the free initial advice that credit counselors and many bankruptcy attorneys offer before deciding on a path.
Whats The Difference Between Chapter 7 And Chapter 13 Bankruptcy
The major difference is time Chapter 7 takes 4-6 months Chapter 13 takes 3-5 years and money. You can have most, or all your unsecured debt discharged in Chapter 7 bankruptcy. In Chapter 13, some of your debt is forgiven, but only if you meet the conditions approved by the trustee and bankruptcy judge.
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You Cant Afford The Attorneys Fees Required To File Chapter 7 Bankruptcy
Unfortunately, because of certain BAPCPA-mandated changes to bankruptcy law, attorneys fees, administrative fees and new requirements cost bankruptcy petitioners more than ever before. If you cant afford the more than $1,000 in costs associated with a bankruptcy case, it may not work for your situation.
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What Does The Simplest Chapter 13 Case Look Like
When youre filing Chapter 13 bankruptcy in Texas, you and your attorney propose a payment plan based on your ability to pay. Through this plan you usually pay back only part of your debts, and sometimes only a little to some of your creditors.
Your plan states how much you pay each month almost always much less than you were paying before. You pay that amount for a period usually covering three to five years, and at the end of that time you no longer owe any debts, except long-term ones like your home mortgage, if you so choose, and student loans. The rest of the unpaid debts are discharged, or legally written off, and you are debt-free.
Your proposed plan is built around a detailed set of laws about how you must treat each kind of debt. If you have certain kinds of special debts called priority debts such as newer income taxes or any child support arrearage those would have to be paid in full over the life of your plan.
Secured debts, like your mortgage, vehicle and furniture loans, are treated in a special way, whether these are paid in full or in part depending on many factors. Debts that are neither priority nor secured are called general unsecured debts, and are generally paid only to the extent that there is money left over to pay them most people do not have to pay any of these amounts back. Especially with priority and secured debts, Chapter 13 usually gives you significant advantages over how these creditors are handled compared to Chapter 7.
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Official Instructions And Committee Reports
Instructions are easier to come by than they used to be. The official U.S. Court website now offers instructions with these forms.
In addition they offer a link to the congressional committee reports that were written at the time the forms were created and revised. These committee reports are not step-by-step instructions, but rather a broad description of the purpose of each form.
The Most Common Chapter 7 Exemptions
Even though every state will handle Chapter 7 bankruptcy exemptions a little differently, there are some common types of property that are usually protected. For example, your car, home, and clothes are usually protected. However, collectibles, investments, and vacation homes are less likely to be exempt.
Again, the Chapter 7 bankruptcy exemptions will vary by state and federal laws, so the following is only a rough guideline. For more specific information, research the laws in your area or consult with a bankruptcy attorney.
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Choosing A Chapter 13 Bankruptcy Home Loan Company
After a chapter 13 bankruptcy, it might well be in your future plan to obtain a mortgage. This is far from impossible thanks to the knowledge of our mortgage consultants. We specialize in assisting clients with a bankruptcy in their past to find the right mortgage that suits their situation. Having had extensive training in this area, our advisers are well aware that you have proven yourself to be responsible in reorganizing your finances through the help of a chapter 13 bankruptcy. Get in touch today to find out how Peoples Bank Mortgage can help you open the door to your dream home.
Your Income Is Significantly Greater Than The Median Income For A Family Of Your Size In Your State
In order to file for Chapter 7 bankruptcy under BAPCPA, you must pass the Chapter 7 means test, which compares your income to the median income level where you live. If you make substantially more than the median family of your size, youre unlikely to qualify for Chapter 7 protection. In fact, if you have a steady, regular income, you may benefit more from a Chapter 13 filing. Your bankruptcy lawyer will be able to help you make this determination.
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Understand The Differences Between Chapter 7 And Chapter 13
Chapter 7 and Chapter 13 bankruptcy are the most common consumer bankruptcy filed in the United States. You need to know the difference because one chapter is more expensive and also often takes much longer.
Chapter 7 Bankruptcy in Texas
A Chapter 7 bankruptcy is referred to as liquidation bankruptcy. In many cases, bankruptcy filers do not lose their home or vehicle by using bankruptcy exemptions. We will cover how your belongings may be at risk below.
Heres what you need to know about filing Chapter 7 bankruptcy in Texas.
Chapter 13 Bankruptcy in Texas
A Chapter 13 bankruptcy is known as a wage earners plan. In many cases, you will pay back a portion of your unsecured debts in a payment plan.
Heres what you need to know about filing Chapter 13 bankruptcy in Texas.
For more information, you may consider reading, Is it better to file Chapter 7 or Chapter 13? and Is Chapter 13 Worth It? You should also consider the pros and cons of bankruptcy.
You Are Protected Right Away
The moment your Chapter 7 case is filed, virtually all collection efforts by creditors against you are legally stopped. This includes virtually any and all ways to collect a debtwage garnishments, lawsuits, judgments, phone calls, mailed or emailed bills and collection letters, home and other real estate foreclosures, repossessions of vehicles and furniture, income tax liens.
In addition, if a creditor does continue trying to collect illegally, the bankruptcy court can punish them. As a result, almost all creditors do immediately stop once they become aware of a Chapter 7 filing.
There are some exceptions to this protection, but they are quite narrow. There are some very specific kinds of obligations and legal proceedings not affected by a Chapter 7 filing, like criminal fines and criminal proceedings, as well as child support arrearage and many domestic relations matters.
However, in rare instances, if you filed and had dismissed one or more bankruptcy cases in the prior year, the protection against creditors either does not come into effect at all or potentially expires after 30 days.
In the simplest Chapter 7 case, the protection kicks in when your case is filed, it applies to all your creditors, and they all immediately honor it by stopping all their actions against you.
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File Your Bankruptcy Petition
When preparing the bankruptcy petition and schedules, you must accurately describe your financial situation, including income, expenses, property, and debts. Our Firm provides the necessary intake forms to facilitate this important process. Bankruptcy is all about disclosures. The need for total accuracy is critical to obtain approval from the Court and avoid issues in the case. A qualified attorney can guide you through this process and ensure everything is submitted as accurately as possible.
Estimate Whether You Will Lose Any Property
As you can imagine, many people want to keep their home, car, cash, etc. when filing bankruptcy.
You need to understand the bankruptcy exemptions in Texas. The bankruptcy exemptions are complex because some states allow you to choose between state and federal exemptions when filing bankruptcy. For example, check out the Texas homestead exemption.
As such, we created this Texas bankruptcy exemptions calculator to simplify the information. This free calculator helps you estimate whether your belongings are at risk when filing bankruptcy in Texas.
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What Happens When You File Bankruptcy In Texas
If youre struggling financially, declaring bankruptcy gives you the opportunity to pay down a portion of your debts over time or have some of them eliminated entirely through discharge. Sounds like a great solution for when times get tough, right?
There are, however, specific procedures to understand before filing for bankruptcy, as well as potential consequences to your credit and other facets of your life which can last for many years.
Whether or not to declare bankruptcy is an important decision and not one to be made lightly. We are asked all the time by clients:
- What happens if I declare bankruptcy?
- What happens after bankruptcy?
and so many more questions. For that reason, we want you to be informed going into the process, and to help weve put together real-world advice and answers to some of the most frequently asked questions our Houston bankruptcy lawyers answer when helping bankruptcy clients.
Who Can File For Bankruptcy In Texas
People and corporations can file bankruptcy in Texas. You must live or have your principal assets in the Western District of Texas for 90 days before you can file bankruptcy here. Erin can file bankruptcy cases in all the bankruptcy courts in Texas but generally limits her practice to Central Texas bankruptcy filings. However, since her office and the bankruptcy courts are now all virtual due to the Pandemic, she can file cases in any bankruptcy court in Texas.
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Will Filing Bankruptcy In Texas Erase My Debts
Bankruptcy wipes out many bills, like , overdue utility payments, medical bills, personal loans, and more. You can even get rid of a mortgage or car payment if you’re willing to give up the house or car that secures the debt.
But you can’t discharge all debts. Nondischargeable debts, like domestic support arrearages and recent tax debt, won’t go away in bankruptcy, and student loans aren’t easy to wipe out . You’ll want to be sure that bankruptcy will discharge enough bills to make it worth your while.
When You File Your Bankruptcy Case Or Within 14 Days After You File
You must file the forms listed below either when you file your bankruptcy case or within 14 days after you file your Voluntary Petition for Individuals Filing for Bankruptcy . If you do not do so, your case may be dismissed. Although it is possible to open your case by submitting only the documents that are listed under When you file your bankruptcy case, you should file the entire set of forms at one time to help your case proceed smoothly.
Although some forms may ask you similar questions, you must fill out all of the forms completely to protect your legal rights.
The list below shows the forms that all individuals must file as well as the forms that are specific to each chapter. For copies of the official forms listed here, go to http://www.uscourts.gov.
All individuals who file for bankruptcy must file these forms and the forms for the specific chapter:
Schedules of Assets and Liabilities which includes these forms:
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Disclosure of Compensation to Debtors Attorney Unless local rules provide otherwise, Directors Form 2030 may be used.
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Copies of all payment advices or other evidence of payment that you received within 60 days before you filed your bankruptcy case. Some local courts may require that you submit these documents to the trustee assigned to your case rather than filing them with the court. Check the local courts website to find out if local requirements apply. Go to http://www.uscourts.gov/courtlinks.
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Legal Guidance From The Law Office Of Mark B French
After Chapter 7 bankruptcy is complete, you are no longer liable for any debts covered under that particular case. In addition, creditors are required to cease all collection attempts. At The Law Office of Mark B. French, our lawyers have more than 30 years of experience helping clients through their bankruptcies.
Speak with our Bedford Chapter 7 bankruptcy attorneys from The Law Office of Mark B. French to better understand the process. We can help you determine if Chapter 7 is right for you.
Schedule a case evaluation at your earliest convenience bycontacting our firm. We can assist you through this emotional and difficult financial situation.
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The entire staff was always friendly and helpful!
Grateful Client
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Information For Debtors Without Attorney Representation
USEFUL INFORMATION FOR DEBTORS WITHOUT ATTORNEY REPRESENTATION
Individuals can file bankruptcy without an attorney, which is called filing pro se. However, seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes. We strongly recommend you watch the following videos and review written instructions under this link. This information will provide you with a better understanding of the bankruptcy process, the different chapters under which a bankruptcy case may be filed and can assist you in determining if this is the best option for you.
Filing personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Court employees and bankruptcy judges are prohibited by law from offering legal advice.
The following is a list of ways your lawyer can help you with your case.
- Advise you on whether to file a bankruptcy petition.
- Advise you under which chapter to file.
- Advise you on whether your debts can be discharged.
- Advise you on whether or not you will be able to keep your home, car, or other property after you file.
- Advise of the tax consequences of filing.
- Advise you on whether you should continue to pay creditors.
- Explain bankruptcy law and procedures to you.
- Help you complete and file forms.
- Assist you with most aspects of your bankruptcy case.
Social Security Card
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Chapter 7 Vs Chapter 13
Chapter 7 and Chapter 13 are the two most common types of personal bankruptcy.
In a Chapter 7 bankruptcy, a trustee appointed by the bankruptcy court will liquidate many of your assets and use the proceeds to pay your creditors some portion of what you owe them. Certain assets are exempt from liquidation. Those typically include part of the equity in your home and automobile, clothing, any tools you need for your work, pensions, and Social Security benefits.
Your nonexempt assets that can be sold off by the trustee include property , a second car or truck, recreational vehicles, boats, collections or other valuable items, and bank and investment accounts.
In Chapter 7, your debts are typically discharged about four months after you file your bankruptcy petition, according to the Administrative Office of the U.S. Courts.
In a Chapter 13 bankruptcy, by contrast, you commit to repaying an agreed-upon portion of your debts over a period of three to five years. As long as you meet the terms of the agreement, you are allowed to keep your otherwise-nonexempt assets. At the end of the period, your remaining debts are discharged.
In general, people with fewer financial resources choose Chapter 7. In fact, to be eligible for Chapter 7, you must submit to a means test, proving that you would be unable to repay your debts. Otherwise, the court may determine that Chapter 13 is your only option.
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