How to File Bankruptcy in Texas

Are you wondering how to file bankruptcy in Texas? The first step is understanding what bankruptcy is.

There are 2 different kinds of bankruptcy that you and I can file. One is a chapter 7 (outlined below.) Once you have the basic idea about what chapter you think would be most beneficial for you, the next step is deciding if you should get a bankruptcy attorney. Future posts will explain the difference between a chapter 7 and chapter 13 bankruptcy, and go into more detail about whether or not you should hire an attorney for your bankruptcy or do it yourself.

Chapter 7 Bankruptcy Overview And Characteristics

how to file bankruptcy in texas A successfully filed Chapter 7 Bankruptcy completely discharges, or wipes out, most unsecured debts, including but not limited to credit cards, medical bills, utility bills, payday loans, and any other debts that do not have collateral or a hard asset attached to them. Chapter 7 bankruptcies are the most common type of bankruptcy and are commonly referred to as a "Fresh Start" Bankruptcy.

Characteristics of Chapter 7 include:

1. Permanent Discharge of Unsecured Debts

In general, all or nearly all unsecured debts are eligible for discharge in a Washington State Chapter 7 bankruptcy. These are debts that have no assets attached to them. For example, the following are all typically discharged in Washington Chapter 7 bankruptcy: credit cards, unpaid medical bills, repossession deficiencies, signature loans, payday/cash advance loans, most collection matters, and nearly all lawsuits. Certain debts, however, such as student loans and back taxes, probably will be eligible for discharge.

2. Permanent Discharge of Secured Debts if the Secured Property is Surrendered

If you choose to surrender property that is carrying a debt balance, these debts are typically permanently discharged as well. For example, the secured loan on a car is wiped out (discharged) if you allow the car is repossessed or simply forfeit it and where you owe more than the car is worth (a repossession deficiency). If not already repossessed, the property can be surrendered before or after you file for bankruptcy.

3. Automatic Stay

After you sign off on your Washington State Chapter 7 Petition, our offices will electronically file it in United States Bankruptcy Court. Immediately upon filing, the court enters an order protecting you from all creditor action. In so doing, the Bankruptcy Court orders all creditors to stop all harassing phone calls, lawsuits, threats, judgments, repossessions, and garnishments. This protection Order is known as the "Automatic Stay".

4. Keep Exempt Property

Most people are able to keep all of their property in a bankruptcy. If you have furniture and household goods of average value and are willing to keep up your car payment(s), you will most likely keep all of your personal property. Retirement accounts (401(k), IRA, etc) are also exempt property that you will be allowed to keep following a final discharge of your unsecured debts in a bankruptcy proceeding.

5. Keep your House

In a Chapter 7 bankruptcy, you may continue to pay your mortgage or your car loan and keep the house or car by signing a "Reaffirmation Agreement" or, in most cases, by simply remaining current on your secured debts and continuing to make the regular payments. In effect, a reaffirmation agreement takes the place of your original agreement and essentially makes it as though you have not filed a bankruptcy on those particular loans. In many instances, however, we do not recommend filing a reaffirmation agreement. We simply recommend that you keep making your monthly payment.

Usually homeowners who file for bankruptcy do so because they do not have enough equity to refinance their home to pay of their unsecured debts. In the State of Washington for example, so long as you do not have more than $125,000 of equity after typical closing costs from a sale, you are virtually assured of keeping your home so long as you continue to make your mortgage payments (and secured lines of credit, if any).

While filing for bankruptcy will not lower your regular monthly mortgage payment, a Washington State Chapter 13 Bankruptcy (not Chapter 7) will allow you to catch up on your payments over as long as a five-year period. In order to qualify for a Chapter 13 bankruptcy, however, you must make payments toward the amount you are behind in your mortgage AND be able to make your regular mortgage payment.

If you can now afford to make your mortgage payments, but still wish to sell your home, filing a Chapter 13 bankruptcy will cancel the scheduled foreclosure sale and give you time to list your property for sale. This will allow you to gain more profits and to net additional proceeds from your home than you would typically earn at a foreclosure sale.

6. Keep Your Car

So long as you continue to make your car payments, you can typically keep your vehicle(s). Most people who have car payments do not have enough or any equity in their vehicle for the cars to be considered non-exempt. In fact, in the majority of cases, people owe more than their car is worth. Only in cases where you have a car that is worth considerably more than the amount owing on it, or a car of significant value where you have no loan on it at all, would you not be allowed to keep your vehicle in a bankruptcy proceeding.
Chapter 7 also gives you an option to "Redeem Your Vehicle". This process involves you paying the secured creditor the fair market value of the collateral, which is typically far lower than the amount you still owe on your current car loan. In exchange for redeeming your vehicle, the creditor provides you with the release of their lien. There are several redemption finance companies we can refer you to that will provide you with a loan will have new and lower payments based upon your vehicle’s current and fair market value.

By: Isabel Searie

Article Directory: http://www.articledashboard.com

At Seattle bankruptcy attorney over 90% of individuals and families still qualify for Washington bankruptcy laws under the 2005 bankruptcy reform act. Research indicates that over 90% of those eligible to file for bankruptcy in Seattle, Everett and Tacoma.

Bankruptcy Law

Changes to the Bankruptcy Code that took effect in late 2005 have made Chapter 11 a less hospitable shelter for struggling companies. Jay Westbrook, a law professor at the University of Texas, said lawmakers focused on changing the [...]

CDX Gas, Bankruptcy in Texas

CDX Gas, LLC, headquartered in Houston, filed for bankruptcy with 17 affiliates in the United States Bankruptcy Court for the Southern District of Texas.

Texas Bankruptcy Lawyer’s

Stephen Sather is an attorney in private practice in Austin, Texas. He is a fomer President of the Bankruptcy Section of the Austin Bar Association and is a member of the American Bankruptcy Institute and the Bankruptcy Section of the [...]

Right Time to File Bankruptcy?

It’s painful and humiliating even to consider bankruptcy, let alone join that crowd in the courthouse corridor, waiting for your name to be called [...]