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Chapter 7 Bankruptcy

Chapter 7 Bankruptcy

There are numerous reasons why you may consider filing for Chapter 7 bankruptcy. Unemployment, medical expenses, mounting credit card debt, divorce – these are all common issues facing Americans. These and other unexpected events can uproot your financial stability and leave you facing what seems like an impossible battle for financial freedom.

First, you should know that you are not alone. Millions of Americans face financial hardship and consider bankruptcy and other options for debt relief. Second, you should know that there are options that can help you regain your financial security and build a more secure future, including rebuilding your credit report.

Bankruptcy is a financial and legal tool that can help you manage debt and get your finances back on track. If you are considering your options for filing bankruptcy, it is important to work with a legal team that knows how bankruptcies work in Texas, and how best to secure a favorable outcome.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a common form of bankruptcy for individuals and families. It is called a straight or liquidation bankruptcy. If you have income but are too far behind on your bills or debt payments, Chapter 7 bankruptcy can help you reset and get help managing your debts.

When you file for bankruptcy, the court puts an automatic stay on your debts. That means creditors and debt collectors have to immediately stop their attempts to collect debts. A bankruptcy Trustee will be assigned to your case. You and your bankruptcy attorney will work with the bankruptcy Trustee throughout the process of resolving your debt.

During a Chapter 7 bankruptcy, you may sell certain property or assets (nonexempt property) to repay creditors. Exempt property cannot be taken or sold. Once all applicable payments are made, any remaining debt at the end of the bankruptcy process will be discharged. You should know, however, that some debts cannot be discharged, such as student loans, alimony, child support, and some tax debts.

There is Help and Hope

If you are facing financial hardship and are unsure of what to do next, contact Daic Law. Our bankruptcy attorneys understand the difficult situation you find yourself in. Our team offers compassion and support as you consider your options. For many people, Chapter 7 bankruptcy is the best option to restructure debt and find relief.

With Daic Law, you do not have to manage the bankruptcy process alone. We can help you determine if bankruptcy is right for you. If so, we will work beside you every step of the way to ensure your legal rights are protected.

Don’t wait to get the financial and legal help you need!

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a personal bankruptcy that allows you to discharge unsecured debts and reaffirm certain secured debts. The difference between unsecured and secured debt is as follows:

  • Unsecured Debt: Debt resulting from credit cards, hospital bills, lawsuit judgments, or loans.
  • Secured Debt: Debt resulting from a home mortgage, vehicle loan or other assets

With Chapter 7, you may not have to sell your assets in order to pay your creditors. Texas law has liberal exemption policies that often allows claimants to keep their property and reach a suitable arrangement for paying or discharging debt.

Do I Qualify for Chapter 7 Bankruptcy?

Most people who ask this question are experiencing financial hardship, such as:

  • Owing significant medical bills
  • Being overextended or “maxed out” on credit cards
  • Facing abusive or harassing collection notices or calls
  • Lacking enough income to cover monthly expenses
  • Have a low credit score
  • Have tax debt
  • Have repossessed vehicles or foreclosed property

Frequently Asked Questions

Most people who file Chapter 7 bankruptcy do NOT have to give up their property. That is because Texas bankruptcy laws are quite liberal in terms of what can be sold to resolve debt under a Chapter 7 bankruptcy.

Most people who ask this question are experiencing financial hardship, such as:

  • Owing significant medical bills
  • Being overextended or “maxed out” on credit cards
  • Facing abusive or harassing collection notices or calls
  • Lacking enough income to cover monthly expenses
  • Have a low credit score

But is that enough to qualify you for Chapter 7 bankruptcy? Not necessarily. Texas law requires that consumers considering bankruptcy submit a “means test.” This test assesses your monthly income and compares it to the average median income in Texas. If your monthly income is below that average, then you pass the test. If not, then you must take a secondary test.

Every case is different, and everyone’s financial situation is different. For this reason, it is difficult to say whether one person is eligible or not without reviewing their case. The best way to determine if you qualify for Chapter 7 bankruptcy is to contact an attorney to discuss your situation.

If you are considering filing Chapter 7 bankruptcy, you should contact an attorney as soon as possible. While waiting for your case assessment, begin gathering documents and information that will help your attorney determine if you qualify for Chapter 7 or other types of bankruptcy. Examples of important information your attorney may need includes:

  • Details of any cash
  • Monthly income and expense statement
  • Checking or savings account statements
  • Pension, IRA, 401k, annuity, CD or retirement account statements
  • Collectible items – books, art, antiques, etc.
  • Automobiles, boats, jet skis, airplanes, etc.
  • Luxury goods – fur, clothing, jewelry, accessories, etc.
  • Furniture, equipment, electronics or other household items
  • Property settlement documents – alimony, child support, sold property, etc.
  • Copyrights, patents or trademarks you own
  • Fair market value of houses, condos, land or vacation properties you own

Remember that documenting these items does not mean that they will be sold during bankruptcy. Documenting your assets is important in determining if you qualify for bankruptcy and how best to move through the process.

Chapter 7 bankruptcy allows you to discharge many types of debt. There are some debts, however, that cannot be discharged per federal law. These debts include:

  • Criminal fees, fines or restitution
  • Certain types of taxes
  • Child support, alimony or spousal support
  • Student loans
  • Debt due to personal injury or wrongful death claims against you
  • Debt that is not included in your bankruptcy schedule

It is important to know what types of debt cannot be discharged through Chapter 7 bankruptcy. If you are looking for debt relief for any of the debts listed in this section, Chapter 7 may not be right for you. However, speak with an attorney before making a decision.

Most Chapter 7 bankruptcy cases last between four (4) and six (6) months. However, your case could take longer depending on the details of your case, the type of debts, and negotiations with creditors. Also, if you want to attempt to have certain debts like student loans discharged, the process is much more lengthy.


At Daic Law, we focus on the rights and needs of individuals and small business owners. If you are in the midst of financial hardship and are considering bankruptcy, we can help. Contact us to find out if Chapter 7 bankruptcy is right for you. We will carefully review the circumstances of your debt and assets and help you make the best decision for your financial future.

Get your free consultation with Daic Law to review your options for debt defense, bankruptcy, or other forms of debt relief.