Frequently Asked Questions
BANKRUPTCY QUESTIONS
What is Bankruptcy?
Chapter 7 vs. 13 Bankruptcy?
Do I qualify to file Bankruptcy?
How much does it cost to file?
How long does Bankruptcy take?
PERSONAL IMPACT
Will I lose my Car?
Will I lose my House?
Can I Bankrupt my Taxes?
Do I have to Bankrupt all my Debts?
Who deals with my Creditors?
How do I reestablish my Credit?
PROTECT YOURSELF
Stop Foreclosures
Stop Creditor Harassment
Stop IRS Liens, Harassments, and Garnishments
What Is Bankruptcy?
Bankruptcy is a program established by our government to ensure that Americans never get into endless debt and to give Americans a way to get out of debt and start over. There are two types of personal bankruptcy: Chapter 7 and Chapter 13.
In bankruptcy, you are formally asking the court to give you protection from your creditors to allow you to eliminate the debt forever.
Bankruptcy has a long tradition in the history of Western civilization. The Old Testament Book of Deuteronomy 15:1-2 instructs the ancient Israelites to do the following:
"At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbuor shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the Lord’s release."
Last year, more than one million people filed consumer bankruptcies. It appears that this year there will be more. On an almost weekly basis, we learn about another corporation, airline, or investment firm facing bankruptcy. Now, with the subprime mortgage crisis and widespread job loss impacting the housing market, we learn irregular underwriting practices and outright fraud on the part of financial institutions have left millions of Americans facing foreclosure and bankruptcy.
Chapter 7 vs. 13 Bankruptcy?
Chapter 7
Chapter 7 is usually the preferable choice for consumer debt because in a chapter 7 you are allowed to bankrupt all your unsecured debts (credit cards, medical bills, judgments, repossessions, unpaid personal loans, and many more). You can also bankrupt some IRS income taxes. You can choose whether or not to keep your secured debts and continue pay them (house, cars, furniture, etc.). When you file a Chapter 7, you can keep most of your assets such as your pension and retirement plans, your house, your car, your furniture, and your personal possessions. For a complete itemization of what you are allowed to keep and still bankrupt all your debts, see Tx. Prop Code 42.001
You must qualify in order to file a Chapter 7. To qualify, your income has to be within a certain range, and your debt and expenses have to be a certain amount. There is no magic number, however. Your ability to file a Chapter 7 depends on many different factors. This is one reason your attorney must know how to calculate your true income and your true expenses for purposes of qualifying for a chapter 7.
Chapter 13
If you do not qualify for a Chapter 7 because your income is too high or your expenses too low or because some of your debt is not dischargeable, then you still have Chapter 13 available. The Chapter 13 is also recommended as a way to partially pay back debt which cannot be discharged in a chapter 7, such as certain taxes, or as a way to pay back arrearages on mortgages and/or car payments, when you are keeping your home or saving it from foreclosure. Simply put, a chapter 13 is a bill consolidation program. You will partially pay back your creditors based your income and expenses and the nature of the debt, for a time period of three to five years. Unsecured creditors get a prorated payout but are considered paid in full.
Do I qualify to file Bankruptcy?
You must qualify in order to file a Chapter 7. To qualify, your income has to be within a certain range and your debt and expenses have to be a certain amount. There is no magic number, however. Your ability to file a Chapter 7 depends on many different factors. This is one reason your attorney must know how to calculate your true income and your true expenses for purposes of qualifying for a chapter 7.
How much does it cost to file?
Our usual attorney’s fee for a Chapter 7 bankruptcy is $850.00. In addition, there is a Federal Court filing fee of $299.00.
We offer a discount to clients who input their own information. If you are interested in inputing your own information into our system, click here.
How long does Bankruptcy take?
Chapter 7
We can file your petition immediately if you have an emergency of some kind. From the date we file your petition, it takes only ninety days to complete and close your case! Then you can start to rebuild your credit. How long does it take to reestablish credit?
Chapter 13
Usually takes three to five years.
Will I lose my Car?
You can usually keep your paid-for car. If you are still making payments, you can keep making payments on your current car and keep it out of the bankruptcy if you wish. If you owe more than it is worth, you may want to voluntarily get rid of that car. That is up to you.
Will I lose my House?
Bankruptcy is designed to give you a fresh start, not to leave you destitute. You can usually keep all of your property and at the same time bankrupt your creditors. This property is commonly referred to as exempt property. The exemptions allowed in Texas protect a majority of property that is important to people. For example, you can protect $125,000 equity in your home. You can exempt $60,000 worth of personal household goods, and 100 percent of your qualified retirement accounts. We find an overwhelming majority of people with whom we meet would not lose any of their property in a bankruptcy filing.
Can I Bankrupt my Taxes?
Yes. You may be able to bankrupt past-due income tax. It must be filed for the proper amount of time. There are various considerations. Let us determine whether or not you can discharge your income taxes. Click here.
Do I have to Bankrupt all my Debts?
No. You do not have to bankrupt all your debts. You can continue to pay for secured items (house, car, furniture, etc.). You can reaffirm your debt to creditors and continue to pay the debt if you want.
Who deals with my Creditors?
We do. As soon as you retain us, we become responsible for dealing with your creditors, and creditors are forbidden by law from contacting you. We advocate for you from the first day until the case is closed and your debt is discharged.
How do I reestablish my Credit?
The second reason for filing bankruptcy is to get rid of your oppressive debt and reestablish your credit. Remember, after you file bankruptcy, you don’t owe anybody any money, or you owe a lot less money, and you are not in default to any creditors. Therefore, in order to reestablish your credit, all you have to do is demonstrate a payment history AFTER bankruptcy. Usually, you can reestablish credit to qualify for an FHA loan for real estate in less than 24 months. For revolving credit and vehicles, it can be considerably sooner.
Stop Foreclosures
If you are being threatened with foreclosure or have received a foreclosure notice, we can stop the foreclosure and give you time to assess whether or not you can develop a plan to pay out the unpaid mortgage payments. Then we can negotiate the back payments, or force the mortgage company into allowing you to pay out the mortgage payments in a chapter 13 for up to sixty months.
Stop Creditor Harassment
As soon as you retain us, we become responsible for dealing with your creditors, and creditors are forbidden by law from contacting you. We advocate for you from the first day until the case is closed and your debt is discharged.
Stop IRS Liens, Harassments, and Garnishments
If the IRS is about to lien your property or garnish your tax return, you may be able to bankrupt the taxes completely in a Chapter 7, or at least force the IRS to take payouts in a Chapter 13. For more information, click here.
