Houston Bankruptcy Attorney
Are you in debt? Have you fallen behind and can’t catch up? You are not alone.
Thousands of people file for bankruptcy each year to gain relief from their overwhelming debts.
The U.S. Bankruptcy Code establishes 6 types of bankruptcy. The most common types are found in Chapter 7 and Chapter 13 for individuals called consumers. More than half of all bankruptcy filings fall within these 2 Chapters.
Comparing Chapter 7 and Chapter 13
The most common consumer bankruptcies are Chapter 7 and Chapter 13. Each type has different advantages and disadvantages.
- This type of bankruptcy, also called a “liquidation bankruptcy”, is typically used to eliminate certain unsecured debts through a “discharge order”, including credit cards, medical bills, and other unsecured loans.
- If your property is exempt (meaning there is a legal exemption to protect the property), you will not lose anything during Chapter 7. However, if you have non-exempt property (such as boats, extra vehicles, or real property that is not a homestead), a Chapter 7 Trustee will sell this property to pay your creditors. Although most non-exempt property is subject to liquidation, there are limited exemptions that may protect this property. Our Firm can help determine if these exemptions apply to your situation.
- If there is no property to sell, the Trustee will close the case as a “no asset bankruptcy”.
- The whole process takes about 4 to 6 months to complete, and when it is over, you will be completely free from all dischargeable debts.
- This type of bankruptcy, also called a “wage-earner’s bankruptcy”, is typically used to protect important personal property from aggressive collection actions, including home foreclosure and vehicle repossession.
- Chapter 13 requires you to file a plan that advises your creditors how you intend to re-pay your debts. The plans range from 3 to 5 years, depending on your income and debts.
- Unlike Chapter 7, Chapter 13 allows you to strip a second or third mortgage if the value of your home has significantly declined and these loans are no longer collateralized by the value of the property. Second, if you purchased your vehicle more than 910 days before the bankruptcy filing, you can pay the value of the car, as opposed to the claim amount, provided the value is less than what you owe. Most importantly, Chapter 13 allows you to keep any non-exempt property, as long as you pay a certain percentage in the plan to your unsecured creditors.
- At the end of the plan, your secured debt will be current, and any remaining unsecured debt will be discharged.
The Automatic Stay
The advantages of consumer bankruptcy start very early in the process. The second you file your petition, a court order called the “automatic stay” is issued to your creditors. This order specifically restricts creditors from moving forward with any action to collect on a debt while the bankruptcy is moving through the court system.
The automatic stay puts an end to ALL creditor harassment, including those annoying phone calls, threatening letters, and lawsuits. Any creditor who continues a collection action will face serious legal consequences.
Qualifying for Bankruptcy Relief
In 2005, Congress amended the federal bankruptcy laws to prohibit fraudulent and repeat filings. Since that time, consumers who have the ability to pay their debts can no longer seek relief under Chapter 7 (regardless of the type of debt).
If you do not qualify for Chapter 7, you can still seek relief under Chapter 13 (which can actually be a better option, depending on your situation).
The Road to Financial Freedom Starts Here
Bankruptcy has helped millions of Americans stop creditor harassment, avoid home foreclosure, and resolve unpaid debts. Let our Firm help.
We will always be open, informal and honest. Our goal is to relieve your financial problems with the least amount of stress and confusion as possible.
To speak with a Houston Bankruptcy attorney today, please contact our Firm at 281-888-5581.