By law, once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. A provision of the Bankruptcy Code called the automatic stay prevents bill collectors from taking any action to collect debts. A creditor may be liable for court sanctions if it continues to use collection tactics once informed of the bankruptcy.

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When you file a Chapter 13 case, you agree to pay over to the Chapter 13 trustee a portion of your disposable income each month for 3 to 5 years. The disposable income is the money you have left over after your necessary expenses are paid. These payments are used to pay your creditors a agreed-upon percentage of your original debt. Usually, your assets are not affected. Only your future income is paid to the trustee.

Individuals may file Chapter 13 bankruptcy petitions if they (1) reside, have a domicile, a place of business, or property in the United States, or a municipality; and (2) have a source of regular income. Corporations and partnerships may not file a Chapter 13 bankruptcy petition.

If you filed bankruptcy before, your right to a discharge in a succeeding case may be affected.

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In a Chapter 7 bankruptcy, many or all of your debts are wiped out completely by liquidating (selling) nonexempt property and paying off your creditors. However, the court assures that you have sufficient assets to make a fresh start and so some assets (exempt property) are not eligible for liquidation. In most cases, you receive a discharge of all dischargeable debts (see below for definition).

Almost any individual, partnership, or corporation can file a Chapter 7 bankruptcy petition. The debtor must reside, have a domicile, a place of business, or property in the United States. You can file a Chapter 7 bankruptcy petition regardless of whether or not you are employed.

In order to be eligible for Chapter 7, the debtor must satisfy a “means test” (see below for definition). The court will evaluate the debtor’s income and expenses to determine if the debtor may proceed under Chapter 7.

If you filed bankruptcy before, your right to a discharge may be affected.

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There are several kinds of bankruptcy.
Chapter 7 – liquidation of credit card debt primarily with the ability to reaffirm secure debts
Chapter 11 – reorganization for businesses and for individuals with excessive debt
Chapter 12 – reorganization for family farmers
Chapter 13 – reorganization for individuals with a regular source of income who want to save their home from foreclosure

Most individuals and couples file either a Chapter 7 case or a Chapter 13 case.

If you choose to file either of these, you are required to take a Debtor Credit Counseling class prior to filing.

Chapter 13 Bankruptcy · Chapter 7 Bankruptcy · File Bankruptcy

Of course. Some people have successfully managed their finances through a payment plan that can be negotiated directly with a creditor. Our office can represent you in obtaining loan extensions, compromises and workout agreements through negotiation.

Note: Texas law allows creditors to satisfy their judgments out of the debtor’s property, including bank accounts and certain personal property. If you sell real property after the judgment is filed, you will most likely have to satisfy the judgment out of the proceeds of the sale. Judgment creditors cannot, however, foreclose on your homestead to satisfy the judgment, and they cannot garnish your wages.

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Singular events such as unemployment, divorce, an illness, lawsuits or significant IRS debt often force people to struggle financially. If any of the following are true for you, you might want to consider bankruptcy as an option to getting back on your feet.
• You cannot pay your bills as they come due
• You start considering using your VISA card to pay your MasterCard
• You receive a letter from your mortgage company threatening foreclosure;
• You face the repossession or imminent repossession of a vehicle;
• Your wages are garnished
• You are considering a home equity loan or cashing in your 401(k) or your IRA to consolidate your bills
• You just can’t take the stress any more from collection letters and phone calls.
In the vast majority of cases, people who file bankruptcy keep all of their assets. In fact, assets like your home, car, pension fund and IRA are protected from your creditors if you file bankruptcy.

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