Bankruptcy
Trusted Counsel in Harris & Montgomery Counties for more than 20 years
Chapter 7 or Chapter 13
We understand that life sometimes throws a curveball. Medical expenses, long-term unemployment or the decrease in hours and wages can turn your life upside down. If you’re struggling with monthly payments, and drowning in debt, contact us or call (936) 499-5780 for a free consultation.
Rick J. Deal, our Conroe bankruptcy lawyer, is armed with deep legal knowledge and more than 20 years’ experience. He can help smooth the bankruptcy process and handle any problems that may accompany it.
Below are the two most common types of bankruptcies for individuals, Chapter 7 and Chapter 13. Depending on your unique situation, one may fit your needs better than the other.
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Chapter 7 Bankruptcy
Known as the “fresh start” bankruptcy, Chapter 7 provides relief from credit card debt, medical bills, routine civil judgments, other unsecured debt and personal loans. It requires that you give up non-exempt property that exceeds certain limits. The court-appointed trustee sells the property, and the proceeds settle the debt with your creditors. Debt that is wiped out in Chapter 7 includes:
- Credit Cards
- Vehicle
- Medical Bills
- Utility Bills
- Personal Loans
- Back Rent
How Do I Determine If I Qualify for Chapter 7 Bankruptcy?
If your income is below the median income for your household size, you likely qualify for Chapter 7. However, if you have a higher income, you must pass the Texas means test to be eligible. The means test determines whether you can pay back your debts through a Chapter 13 repayment plan or if you meet the requirements for Chapter 7.
The means test examines your disposable income and measures it against the median household income in the area. To find out if you are eligible, you need to calculate your current monthly income, including rental properties, any business income, wages, dividends, retirement plans and pensions. Then list of all expenses, such as those you are legally required to pay and as well as those that are necessary for your health and welfare.
Texas has several bankruptcy exemptions, from the homestead and vehicle exemptions (your home and car) to home furnishings, jewelry, firearms and tools of a trade. We can help you determine which income and property are exempt. In some cases, you may need to decide which items to keep as exemption and which to liquidate for the Chapter 7 bankruptcy.
There are many factors to consider before filing bankruptcy. Just because you CAN file for Chapter 7 doesn’t it is in your best interests to do so. We can discuss alternatives that enable you to get out from underneath your debt and rebuild your credit.
What are the Benefits of Chapter 7 bankruptcy?
- No minimum debt requirements
- Unsecured debts are discharged (wiped out)
- An automatic stay in protects against wage garnishment, foreclosure and repossession
- You may complete bankruptcy in about six months
- Creditor collection attempts stop immediately
- Property acquired and wages earned are not subject to the bankruptcy court or creditors
Chapter 13 Bankruptcy
If you are dodging creditor calls, facing lawsuits, a lien on your mortgage or wage garnishment, you may be looking for a way out. Chapter 13 can help if you have consistent income but more debt than you can handle. It may allow you to get past financial issues and rebuild your credit.
Chapter 13 reorganizes debt, enabling you to pay creditors while keeping your property. It’s intended to help individuals who have a job but don’t earn enough to pay their bills.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
If your income is below the state’s median income for your household size, you likely qualify for Chapter 7. However, if you have a higher income, you must pass the Texas means test to be eligible. The means test determines whether you can pay back your debts through a Chapter 13 repayment plan or if you meet the requirements for Chapter 7.
To find out if you are eligible, you need to calculate your current monthly income, such as wages, any business income, rental properties, dividends, pensions and retirement plans. You must also provide a list of all expenses, such as those you are legally required to pay and as well as those that are necessary for your health and welfare.
We can help you determine which income and property are exempt and help you establish whether or not you qualify for Chapter 7. Please keep in mind that just because you CAN file for Chapter 7 doesn’t mean you should. If it’s not in your best interests to do so, we can help you find an alternative that enables you to get out from underneath your debt and rebuild your credit.
What are the Benefits of Chapter 13 bankruptcy?
- Wipe out tax debt if it qualifies for discharge. Back taxes can also be included in the payment plan.
- Catch up on missed mortgage or vehicle payments
- Keep more non-exempt property than in Chapter 7
- Make up missed alimony or child support payments with a scheduled plan.
- Protect a co-debtor from creditor harassment
- Wipe out old debt
How do I Qualify for Chapter 13 in Texas?
To be eligible for this type of bankruptcy, you must have less than approximately $2,750,000 in unsecured and secured debt. Examples of unsecured debt include student loans, personal loans and credit card accounts. Secured debt includes car loans and mortgages. These numbers may be adjusted periodically, so you should check bankruptcy attorney for the current amounts.
Among the stipulations for filing Chapter 13, is that you have not had a bankruptcy petition dismissed in the last six months. You must also undergo credit counseling within 180 days of filing.
Since Chapter 13 uses a repayment plan, you must demonstrate that you have the means to pay down the debts by submitting proof of income within 14 days of filing. Income can be in the form of earned wages, Social Security payments, pension, proceeds from a property sale, etc.
You must also be current in tax filings, as you must submit proof of the previous four years’ tax returns.
Contact a Conroe Bankruptcy Attorney Near Me
Bankruptcy is a complex legal process, but you don’t have to do it alone. With support from our skilled Conroe bankruptcy attorney we can help you jump through all the bankruptcy hoops so you are financially safe and secure in the end.
When done correctly, it can help you clean up your credit and start over financially. Have you tried working with your mortgage lender, auto loan company and credit card companies? If so, but you haven’t been able to make arrangements that allow you to pay your bills and still provide necessities, contact us today. We can help you get past the obstacles and take your life back.
The attorneys at the Law Office of Rick J. Deal can help you file bankruptcy and wipe out debt while protecting your assets. Contact us today, or call (936) 499-5780.
