If you are hoping for a fresh financial start, consider filing for personal bankruptcy. Bankruptcy allows you to discharge some or all of your debt, repay the debt you cannot discharge on manageable terms, and stop contact from creditors and collection agencies.
There are two forms of bankruptcy open to individual filers and married couples. A Chapter 7 bankruptcy attorney at Allmand Law Firm could explain Chapter 7 vs. Chapter 13 bankruptcy in Houston and determine which process is right for you.
Understanding What Personal Bankruptcy Does
Bankruptcy is a legal means of freeing yourself from punishing debt. As soon as you file for bankruptcy, collection proceedings such as foreclosure, repossession, and garnishment cease.
Depending on the type of bankruptcy you choose, you may have your debts discharged, or you may agree to pay as much as you can over three to five years. However, the courts may not discharge some debts, such as child support, alimony, and taxes, and you remain responsible for addressing those obligations.
When you complete the bankruptcy process, you will be free of dischargeable debt. You can start rebuilding your credit and financial security. If you are ready to file for bankruptcy in Houston or are considering the idea and need more information, reach out to Allmand Law Firm today to learn about Chapter 7 and Chapter 13.
What Is Exempt Property in Bankruptcy?
When you declare bankruptcy, federal bankruptcy laws protect certain property, called exempt property, from creditors. The law allows states to set their own parameters for exempt property.
Texas Property Code § 41.001 and § 41.002 allow you to retain your residence and homestead regardless of its value. Up to 10 acres of property are exempt if you live in an urban area, while 100 acres are exempt for individuals in rural areas and 200 acres for married couples. One vehicle per adult with a driver’s license, farm animals, pets, and personal property such as clothing, jewelry, and furniture are exempt up to a value of $50,000 for an individual and $100,000 for a family.
Pension and retirement funds are exempt. Tools of the trade and property used to practice a profession are exempt. A bankruptcy attorney could explain how your exempt and non-exempt property impacts Chapter 7 and Chapter 13 proceedings in Houston.
The Differences Between Chapter 7 and Chapter 13 Bankruptcy
Individuals and married couples in Houston usually file for either Chapter 7 or Chapter 13 bankruptcy. Discuss the benefits and disadvantages of each with an experienced attorney before moving forward.
Chapter 7
This form of bankruptcy helps people with limited incomes and assets. To qualify for Chapter 7, you must pass a means test. The limits change frequently, but the most recent information can be found here.
Chapter 7 can be a relatively quick way of eliminating unmanageable consumer debt, such as medical bills, credit card debt, and unsecured personal loans. A bankruptcy trustee could sell your non-exempt assets to pay off debt, but many Chapter 7 filers do not have substantial non-exempt assets, so there is often little for a trustee to sell.
Chapter 13
Chapter 13 is available to individuals and married couples who do not qualify for Chapter 7. Chapter 13 allows you to restructure much of your debt and pay it over a three- or five-year time period. If you still have debt at the end of the repayment period, the court discharges it. The disadvantage of Chapter 13 is the long period of court supervision of your finances.
Talk to a Bankruptcy Attorney About Chapter 7 and Chapter 13 in Houston
The two forms of personal bankruptcy have different advantages and disadvantages. Before you commit to filing, contact Allmand Law Firm today to discuss Chapter 7 vs. Chapter 13 bankruptcy in Houston.
