Bankruptcy is a legal process that provides individuals and businesses struggling with overwhelming debt a fresh financial start. In Texas, like in many other states, the bankruptcy process involves complex legal procedures and requires a thorough understanding of the relevant laws. The process of filing for bankruptcy in Texas can seem daunting without professional legal help. Call Davis Ermis Roberts to get help filing for bankruptcy today. We will guide you through the key steps of the process, your options, and considerations for those considering bankruptcy as a solution to their financial difficulties.
Chapter 7 and Chapter 13 Bankruptcy
In Texas, as in the rest of the United States, there are two primary types of bankruptcy available for individuals and businesses. These are known as Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Also known as “liquidation bankruptcy,” Chapter 7 involves the sale of non-exempt assets to pay off debts. Many of the debtor’s unsecured debts are typically discharged, offering a fresh start. In Texas, certain property exemptions are available, allowing debtors to protect specific assets such as their home, vehicle, and personal belongings.
Chapter 13 Bankruptcy
Often referred to as “reorganization bankruptcy,” Chapter 13 involves creating a repayment plan that spans three to five years to pay off a portion of the debt. Chapter 13 is particularly suitable for individuals who have a regular income but are struggling with arrears on secured debts like mortgages and car loans.
The Decision to File
Before starting the bankruptcy process, it’s crucial to evaluate whether bankruptcy is the right choice for your specific situation. This involves assessing the nature and extent of your debts, your income, and your assets. Consulting with an experienced bankruptcy attorney can help you determine the best course of action, whether that’s pursuing bankruptcy or considering alternative options.
Before filing for bankruptcy in Texas, you are required to complete a credit counseling course from a government-approved agency. The goal of this counseling is to assess your financial situation and explore alternatives to bankruptcy. After completing the course, you will receive a certificate, which is a necessary document for your bankruptcy filing.
Filing the Petition
The official bankruptcy process begins by filing a petition with the bankruptcy court. This petition outlines your financial situation, assets, liabilities, income, expenses, contracts, leases, and any pending lawsuits. Along with the petition, you must provide other supporting documents, such as schedules of your assets and liabilities, a statement of financial affairs, and your repayment plan (if filing for Chapter 13).
The Automatic Stay
Once your bankruptcy petition is filed, an “automatic stay” is initiated. This legal order prohibits creditors from continuing their collection efforts, including phone calls, letters, lawsuits, foreclosures, and repossessions. This stay gives you some relief and time to work through your case without the constant pressure of creditors.
A few weeks after filing, you’ll be required to attend a creditors’ meeting, also known as the 341 meeting. During this meeting, you’ll meet with your bankruptcy trustee and any creditors who wish to attend. You’ll answer questions about your financial situation under oath. While this meeting can be intimidating, it’s typically relatively straightforward, and your attorney will help you prepare.
Repayment Plan for Chapter 13
If you’re filing for Chapter 13 bankruptcy, you will work with your attorney to create a repayment plan based on your disposable income. This plan outlines how you’ll repay your debts over a period of three to five years. The bankruptcy court must approve the plan.
Discharge of Debts
In Chapter 7 bankruptcy, eligible unsecured debts are typically discharged within a few months of filing. In Chapter 13, the discharge occurs after the successful completion of the repayment plan. Keep in mind that certain debts, such as student loans and recent tax obligations, may not be discharged.
Navigating the Bankruptcy Process in Texas
Filing for bankruptcy in Texas is a significant legal process that can provide relief to those overwhelmed by debt. However, it’s not a decision to be taken lightly. It’s important to consult with an experienced bankruptcy attorney who can guide you through the process, help you understand your options, and ensure that you follow the necessary steps to achieve a successful resolution to your financial difficulties. If you’re considering bankruptcy as a solution, reach out to us at Davis Ermis Roberts Law Firm to discuss your situation and explore the best path forward. We’re here to help you regain control of your financial future.