What Differentiates Chapter 7? What Can You Expect?
The pandemic has concerns about more than our physical health…for many of us, it’s put us in a precarious financial situation. Maybe our employer went out of business or had to downscale. We may have been out of work for a few weeks or months, putting us behind in house, car and other payments.
The situation created by the pandemic is precisely the type circumstance legislators had in mind when they enacted the American bankruptcy laws. Those laws provide an opportunity for a fresh start for hard-working Americans who have run into financial problems through no fault of their own.
What Is Chapter 7 Bankruptcy?
In a Chapter 7 bankruptcy filing, also known as a “liquidation,” you can permanently discharge some of your debts, ostensibly in exchange for transferring some of your assets to the bankruptcy court, to be sold to satisfy your creditors. Some debts cannot be discharged—child support payments and some other family law obligations are excluded. Other debts are difficult to discharge, such as student loan payments and certain tax arrearages.
There are also exemptions, under both state and federal laws, on property that must be turned over to the bankruptcy court. In Texas, which has extremely liberal bankruptcy exemptions, many people can successfully file for protection under Chapter 7 without having to forfeit any property. Texas has an unlimited exemption for your private residence, as well a motor vehicle, and allows the exemption of one motor vehicle for every person residing in the home.
What Can You Expect When You File for Chapter 7 Bankruptcy?
You must qualify for protection under Chapter 7 by submitting to a “means test,” where the court determines whether you have the resources to pay your creditors off over a 3-to-5-year period. If you do, you won’t be able to discharge debts, but may reorganize them in a Chapter 13 proceeding.
Once you file, you’ll have to provide the court with an accounting of your assets and liabilities. Upon filing, you’ll immediately have the protection of the automatic stay, which prohibits your creditors from calling, writing, contacting you or taking legal action to collect the debt, other than through the bankruptcy proceeding.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.