Chapter 7 Bankruptcy: Understanding the Basics

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Chapter 7 Bankruptcy
Understanding the Basics
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If you are facing foreclosure, your paycheck is
being garnished, or you feel like you are
drowning in bills, IT MAY BE TIME TO CONSIDER
BANKRUPTCY
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Bankruptcy Protection
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A chapter 7 bankruptcy can provide you with a
fresh start while still protecting your home and
your important assets in most cases.
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US Bankruptcy Code
Bankruptcy protection is found in the U.S.
Bankruptcy Code, meaning that the federal courts
have jurisdiction over bankruptcy proceedings
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An individual may file bankruptcy under chapter
7, 11, 12 or 13 of U.S. Bankruptcy Code.
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Chapter 11 -- Typically used by small businesses
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Chapter 12 Family farmers or fishermen
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Used by debtors with significant income and/or
valuable non-exempt assets
Chapter 13 Wage earner plan
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Chapter 7 Quickest way to a fresh start
Simplest and fastest chapter, it is the most
popular option for individuals
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Chapter 7 Specifics
The vast majority of debtors who file chapter 7
are able to retain their assets due to strong
exemption laws under state and federal law
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Almost all debts are discharged in a Chapter 7
BankruptcyThat means that creditors are
forbidden from trying to collect those debts from
people who have filed Chapter 7
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Other chapters require debtor to repay debts over
time
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The Means Test
Debtor must pass means test to file chapter 7
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Compares your income to other Texas residents
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If your income is over the median for your area
it becomes more complicated
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The MEANS TEST is a very complicated form. You
need an experienced bankruptcy attorney to assist
you complete it.
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Chapter 7 Process
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Debtor completes credit counseling course prior
to filing
a
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Petition and bankruptcy schedules filed with
bankruptcy court
b
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The filing of the case creates an injunction
against all creditor collection activities.No
court order is necessaryThe filing of the case
is all that it takes to stop creditor collection.
c
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The trustee is automatically appointed. The
trustee reviews the bankruptcy filings to make
sure they are correct and all assets are properly
claimed as exempt.
d
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Meeting of creditors is held 20-40 days after
filing at a conference room at the court
house.No judge is present.
e
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Creditors may ask about your income and debts
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However, usually no creditors show up to the
meeting of creditors in Chapter 7 bankruptcy
cases.
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Debtor must complete a debtor education course
either online or by watching a DVD.
f
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Debtor is discharged from virtually all debts.
g
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Exemptions
The U.S. Bankruptcy Code includes exemptions that
a debtor may be entitled to use. Additionally,
the individual states may also create exemptions.
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Keeping Your Home, Vehicle and Possessions
Texas has very pro-debtor exemptions that allow
most debtors to retain their homes, vehicles, and
personal possessions
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Unlimited homestead exemption up to 10 acres in
a city and up to 100 acres in the country (200
acres if family)
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Pets and livestock up to 30,000 (60,000 for
head of household)
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One vehicle per family member
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Home furnishings, food, clothing, family
heirlooms, jewelry and two firearmsup to 30,000
in value (60,000 for families)
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Pensions and social security payments are totally
exempt.IRAs and Retirement accounts are exempt
up to 1 million.
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Tools of the trade and farming equipments are
exempt as well.
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Life Insurance is also exempt.
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Debts That Cannot Be Discharged
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Credit Post-Bankruptcy
Worrying about your credit after bankruptcy is
understandable however, for most debtors their
credit improves significantly after a Chapter 7
bankruptcy.
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Debt to income ratio improves the day the
bankruptcy is filed.
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You cannot file a Chapter 7 Bankruptcy case for
at least eight years
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Many debtors can secure car loan during the
Chapter 7 or after the discharge if they have
employment or steady income.
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Obtaining a mortgage loan may take closer to two
years post-bankruptcy
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Want to Know More About Chapter 7 Bankruptcy in
Texas?
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Get Your Bankruptcy Questions Answered
Click to visit centraltexasbankruptcy.com
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