If debt is overwhelming you and you are looking for a debt relief solution, filing bankruptcy might be right for you. Bankruptcy gives you a fresh financial start and allows you to resolve your debt in an efficient manner. The bankruptcy attorneys at Warren & Migliaccio can help guide you through the bankruptcy process and protect your rights at every stage.
We have prepared this ultimate guide to bankruptcy in Texas, so you know what to expect.
Benefits of Filing for Bankruptcy
Filing bankruptcy is an effective debt relief solution that can:
• Eliminate the legal obligation to pay some or all of your debts through the discharge process
• Stop creditors from contacting you or taking enforcement action against you through the pendency of your divorce case
• Prevent your vehicle from being repossessed
• Stop foreclosure and give you time to catch up on missed mortgage payments
• Stop the garnishment of your wages
Preparing for Bankruptcy
To prepare for bankruptcy, you will want to gather important documents and information to help your bankruptcy lawyer at Warren & Migliaccio, including:
• A list of your assets
• A list of the identity and amount of current income sources
• A statement of your financial affairs
• Recent financial transactions
• A list of your debts
• Proof of monthly income
• Budget
• Tax returns for the last three years
• Deeds and title documents
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The Bankruptcy Process in Texas
The general bankruptcy process in Texas consists of the following steps:
Petition
The official bankruptcy process begins when you file a petition and fill out the required court forms.
After filing your bankruptcy petition, an “automatic stay” goes into effect. This is an order from the court that states creditors must immediately cease all collection activities while the case is pending, including:
• Garnishing your wages
• Foreclosure
• Repossession efforts
• Contacting you by phone or mail
• Collecting on a judgment
• Income tax liens
• Lawsuits
If a creditor violates the automatic stay and continues to try to collect illegally, the bankruptcy court can punish them.
Assignment of Bankruptcy Trustee
A bankruptcy trustee is assigned to your case to review your assets and budget to determine how much creditors can get paid. They also manage any payment to creditors.
Creditor Meeting
Creditors have the right to a meeting where they can review the bankruptcy plan. Our compassionate and.
Discharge
After the bankruptcy case is concluded, unpaid debts that are part of the bankruptcy process are discharged.
Should I File Chapter 7 or Chapter 13 Bankruptcy?
Chapter 7 and 13 are the most common types of bankruptcy filings in Texas. Each type of bankruptcy has its own eligibility criteria, advantages, and unique characteristics. An experienced bankruptcy lawyer can review your options and advise you which chapter is best suited to accomplish your objectives.
Chapter 7
Chapter 7 bankruptcy is available to debtors who pass the means test that demonstrates that they cannot afford to repay their debts. Chapter 7 bankruptcy allows you to discharge most of your debts after you liquidate your non-exempt assets and pay off whatever debt you can.
Texas Bankruptcy Exemptions
Texas has generous bankruptcy exemptions that allow you to keep most of your property during a Chapter 7 bankruptcy. The following property will not be liquidated to pay off your debts and you can keep it:
• Homestead – Texas offers an unlimited homestead exemption for any value of your home except that it is limited to 10 acres in a city and 100 acres in the country (200 acres for a family). If you recently sold your home, those proceeds are exempted for six months following the sale.
• Personal property – Texas offers a personal property exemption of $30,000 or $60,000 for the head of household for a variety of personal property
• Burial plots, health aids, crime victim awards, life, health, accident, or annuity benefits, and present value of life insurance
• Retired public school employee group insurance, Texas employee uniform group insurance, and Texas state college or university employee benefit
• Pensions for county and district employees, state employees, municipal employees, firefighters, judges, law enforcement officers and survivors, police officers, and teachers
• Retirement benefits, IRAs, and Keoghs to extent tax-deferred
• ERISA-qualified government or church benefits
• Tools of trade, including tools, equipment, boat, motor vehicles, and books
• Public benefits, including medical assistance, public assistance, unemployment compensation, and workers’ compensation
Texas exemptions are not automatic; you must specifically ask for them. Therefore, it is important to work with an experienced lawyer who knows how to best maximize your exemptions.
Debts That Can Be Discharged
Most unsecured debts can be discharged in a Chapter 7 bankruptcy, including:
• Credit card debt
• Medical bills
• Personal loans
If you have secured debts like a mortgage or car loan, you may have the choice to keep the property and catch up on payments or surrender the property.
Debts that are not typically discharged in Chapter 7 bankruptcy include:
• Child support and alimony
• Tax debt
• Student loans
• Court fees and penalties
• Homeowners’ association fees
• Personal injury debts due to driving while intoxicated
• Debts intentionally left off the bankruptcy filing
Advantages of Chapter 7 Bankruptcy
Chapter 7 bankruptcy offers many benefits, including:
• Discharge of debts
• No need to repay most debts
• Protection from creditors garnishing wages to repay debts
• Debtor gets to keep their income going forward and does not have to be committed to an ongoing plan
Chapter 13
In a Chapter 13 bankruptcy, you agree to reorganize your debts via a manageable monthly plan over three to five years. You make payments to the bankruptcy trustee who administers the payment according to the plan’s terms. The amount of your payment is based on your ability to pay. At the end of the plan’s term, the remaining debts that were part of the bankruptcy plan are discharged.
Advantages of Chapter 13 Bankruptcy
Here are some of the advantages of Chapter 13 bankruptcy:
• Ability to catch up on support payments over the life of the bankruptcy term
• Rolls off your credit report sooner
• Gives you more time to catch up on mortgage arrears
• Possibility of stripping off a second mortgage
• Option to repay back income taxes while being protected from aggressive tax collection efforts by the IRS
Contact a Bankruptcy Lawyer Today
If you are considering filing Chapter 7 or 13 bankruptcy in Texas, the skilled and knowledgeable bankruptcy attorneys at Warren & Migliaccio, L.L.P. are here to help. Contact us today to discuss your legal options with a qualified Texas bankruptcy attorney.
