Financial challenges are an unfortunate part of life. For millions of Americans, job loss, sudden illness, or other life events cause dramatic financial changes that are challenging to overcome. In these situations, it is common for consumers to reach out to a Fort Bend debt defense attorney to discuss bankruptcy.
Bankruptcy can seem like a daunting proposition, but it doesn’t have to be. With the help of a debt defense attorney, bankruptcy can be a smooth process that helps you regain financial stability and start building your financial future.
Fort Bend Debt Defense Attorney Talks Bankruptcy
Are you considering bankruptcy? The attorneys at Daic Law want you to know as much as possible about what to expect before, during, and after the bankruptcy process. That’s why we have developed this guide that offers more information about bankruptcy in Texas.
How Bankruptcy in Texas Works
Bankruptcy in Texas falls under federal bankruptcy laws. There are some state laws that apply to bankruptcy, such as property exemptions and filing information. Generally, however, the process follows a federal process of untangling your finances and finding suitable resolution between you and your creditors.
The bankruptcy process generally includes the following:
- Hire an attorney
- Attend a bankruptcy counseling session
- File for bankruptcy with the applicable court
- A Bankruptcy Trustee will be assigned
- 341 Meeting of Creditors to establish the bankruptcy plan
- Liquidating assets (if you file Chapter 7)
- Establishing a repayment plan (if you file Chapter 13)
- Complete applicable debtor education course(s)
- Debt discharge
Once your debt is discharged, you can start rebuilding your credit and financial stability. A bankruptcy will stay on your credit for 10 years, but that does not mean that your credit score will suffer tremendously during that entire time.
How to Qualify for Bankruptcy
Consumers must qualify to file bankruptcy. The qualifications depend on the type of bankruptcy you plan to file. For Chapter 7 and Chapter 13, the qualifications are as follows:
- Chapter 7: To qualify for bankruptcy, you must pass the Texas means test. This test is required for Texan’s who have moderate or high income. If your household gross income is lower than the median income in Texas for the same size household, you will not need to do the means test.
- Chapter 13: There is no means test for Chapter 13. Instead, you must show that you have a steady source of income and are able to make regular payments on a payment plan. That means showing that you have enough income after essential spending each month to make payments.
Fort Bend debt defense attorney can help you determine if you qualify for bankruptcy without you having to do calculations on your own.
What You Need to File Bankruptcy
Most consumers choose Chapter 7 or Chapter 13 bankruptcy. These are the two most applicable forms for individuals and couples. While you are considering bankruptcy or while you are interviewing potential Fort Bend debt defense attorneys to assist you, start gathering the necessary information and documents you will need, such as:
- List of current income
- List of monthly expenses
- Any recent substantial financial transactions
- List of secured and unsecured debts
- Tax returns for the past two years
- A list of any assets (art, property, vehicles, collectibles, etc.)
- Deeds and title documents for any property
The exact information and documents that you need may vary depending on your case. But this list is a great starting point to get you and your attorney started.
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 bankruptcy are the two most common forms filed by consumers. Chapter 7 is the most common in the United States, with nearly twice the number of Chapter 7 bankruptcies filed than Chapter 13. In Texas, however, Chapter 13 is filed more often.
Below, we provide an overview of the differences between Chapter 7 and Chapter 13:
Chapter 7
Chapter 7 bankruptcy is a fairly quick process that is affordable for most consumers. For the majority of Texan’s whose assets and property consist of essentials for daily living, this is a good option. Generally, this type of bankruptcy results in complete debt discharge.
However, if you have a lot of assets or luxury items, then Chapter 7 could result in you losing some property. That’s because during bankruptcy, the idea is to repay as much of your debt as possible without making it difficult for you to live day-to-day. If you have more than one home, a priceless collection of art, or other similar assets, you may need to liquidate (sell) these assets in order to pay your creditors.
Chapter 13
Chapter 13 bankruptcy is a bit different. With this type, you will be required to pay some or all of your debt, depending on your income, expenses, and assets. During Chapter 13, you will establish a payment plan that ranges from 3-5 years. Once you pay the agreed upon payments or total amount, the remaining debt is discharged.
With Chapter 13, you keep all of your property. If there is a threatened foreclosure, you may also be able to save your home. Chapter 13 is a bit more expensive, and the overall process does take longer, but it is a great option for people who have decent income and who want to keep all of their property.
What Property is Exempt from Bankruptcy in Texas?
There are several property exemptions that you may qualify for when filing bankruptcy in Texas, such as:
- Texas Homestead Exemption: An unlimited exemption on properties less than 10 acres in a developed area, or less than 100 acres in a rural area. The goal of bankruptcy is never to displace consumers or families.
- Texas Motor Vehicle Exemption: Texas law allows consumers to exempt the whole value of one vehicle per licensed driver in the household. There are cases where you can exempt a vehicle for an unlicensed person, if that person relies on a licensed driver to get them around.
- Personal Property Exemptions: Texas law allows consumers to exempt up to $50,000 in personal property, or $100,000 for a family. Therefore, if you are a single person filing bankruptcy and you have $75,000 in personal property, the first $50,000 is exempt and cannot be seized or liquidated during bankruptcy. The other $25,000, however, is not exempt. It is important to review certain exceptions of the valuation, such as guns and jewelry.
Contact a Fort Bend Debt Defense Attorney
Bankruptcy is not always complicated, but there are certain laws and processes that you need to be aware of, and adhere to. That’s why it is a great idea to work with a Fort Bend debt defense attorney if you are considering filing for bankruptcy. An attorney will help you determine which type of bankruptcy is right for you, and will oversee the entire process.
If you are looking for information about bankruptcy, debt defense, or are subject to a debt collection lawsuit, contact Daic Law today! We help hundreds of clients each year resolve debt and debt lawsuits and gain financial independence. For a FREE consultation, call 877-893-6040, or email us at info@daiclaw.com.