General Bankruptcy Information
If you have mounting debts that feel as though they are spiraling out of control or your bills are piling up, and you find it impossible to catch up, you’re not alone. Each year, many Americans find themselves in this challenging position and may face collection notices, lawsuits, judgments, or are about to lose their homes, cars, or other property.
Filing for bankruptcy is a viable solution for most Americans in this position. While it may seem intimidating at first, bankruptcy can put you on the path back toward financial freedom and get rid of the stress of having unpaid bills and creditors on your back. The Law Offices of Bill F. Payne, P.C., can help you navigate the bankruptcy process successfully.
Which Type of Bankruptcy Is Right for You?
While there are six different types of bankruptcy filings, named for the corresponding chapter of bankruptcy law, the two most commonly used are Chapter 7 and Chapter 13. How do you know which one is right for your situation? An experienced lawyer can help you determine which chapter to file, depending on your particular financial situation, including your debts, assets, income, types of debt, and more.
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Filing Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy filing, most debts are discharged, meaning you will no longer be legally obligated to repay these discharged debts. The types of debt discharged include credit cards, personal loans, medical bills, and other types of unsecured loans.
Generally, your essential assets are safe throughout a Chapter 7 bankruptcy proceeding, including things like your home and vehicles you use to go to work or school. However, if you own other real estate properties, additional cars, boats, etc., these assets may be subject to liquidation to pay off the debts. If your assets are considered exempt, you won’t lose anything except your debts!
Filing Chapter 13 Bankruptcy
A Chapter 13 bankruptcy filing protects more of your non-exempt assets but does not immediately discharge debts. You will be required to file a repayment plan to your creditors that details how you will settle your debts, and your lawyer will help you draft this plan. Usually, the repayment plan will lower your monthly payments, making them more manageable. You’ll make monthly payments over a set period, generally three to five years. Then, at the end of your payment period, some portions of your debts may be discharged.
Business Bankruptcy and Other Types of Bankruptcies
Businesses can also use the bankruptcy process but may have different options or restrictions on debts and assets than individuals filing bankruptcy. Chapter 11 bankruptcy is common for companies and organizations and involves a reorganization of the business. Chapter 7 may also be an option, depending on the details of the business or organization. A skilled lawyer can help you decide what’s best for your business.
The Bankruptcy Process in Texas
Your lawyer will guide you through every step of the way in your bankruptcy case, so there’s no need to feel intimidated. In Texas, you’ll first take a “means test.” This test thoroughly explores all your debts and assets and gives your lawyer, and the courts, an idea of which type of bankruptcy is best for you.
After the means test, you’ll file for bankruptcy with the correct district, submitting accurate lists of your income and expenses, creditors, and an inventory of personal property and assets. If you are filing for Chapter 13 bankruptcy, you’ll also submit your repayment plan. Filing fees for the bankruptcy case are also submitted at this time.
During the process, you will also complete a court-approved pre-filing credit counseling course. Your lawyer will direct you to approved courses. Next, you’ll attend a creditors’ meeting. Your creditors are allowed to attend, but in most cases, they do not. A trustee will confirm your identity and ask you a series of questions. Your lawyer will accompany you to this informal meeting.
After your creditors’ meeting, your qualifying debts will be discharged by the court or your repayment plan enforced. The entire process takes a few months to complete a Chapter 7 case, and three to five years for a Chapter 13 case.
If you are considering filing for bankruptcy in the Dallas, TX or North Texas area, contact the Law Offices of Bill F. Payne, P.C. today. Our experience can put you back on track towards financial freedom.