Filing for Bankruptcy in Texas – An Overview
Dripping Springs, Texas Bankruptcy Attorney R. Brian Daniel
In 2010 over 1.5 million individuals and business in the United States filed for bankruptcy protection according to U.S. Bankruptcy Court statistics, and nearly 42,000 cases of those cases were filed in the State of Texas – that’s 115 bankruptcy cases being filed every single day in this state alone.
Filing for bankruptcy protection provides an opportunity for individuals struggling with overwhelming debt to be released from some or all of their obligations; however, many changes to the bankruptcy laws have gone into effect as a result of the Bankruptcy Abuse and Consumer Protection Act of 2005. These changes made the filing process (and qualifications) seemingly more confusing and complex. Included in the new laws were new income limitations regarding an individual’s ability to file under Chapter 7 and a more detailed set of calculations to determine what amounts an individual must pay to the Trustee every month under Chapter 13.
Two of the basic types of bankruptcies handled by The Daniel Law Firm are referred to as “liquidations” (certain assets belonging to the debtor may be deemed non-exempt and may be sold to completely or partially repay creditors) and “reorganizations” (wherein a debt payment plan based on disposable income is created to repay creditors over the course of between 3 and 5 years). There are specific “chapters” of bankruptcy law under which individuals or business may file, depending upon the specific circumstances of the debtor. These chapters are as follows:
- Chapter 7 - A liquidation bankruptcy that can be filed by individuals and businesses. This common form of bankruptcy provides relief from non-secured debt liabilities, but may require certain of the debtor’s non-exempt assets to be surrendered or sold (liquidated) in order to repay creditors. As indicated above, there are now maximum income limits for qualifying to file under Chapter 7. These can be found on the Exemption and Income Limits page of this website. In a Chapter 7 case, a Trustee is appointed to take over your non-exempt property and any such property can then be sold or otherwise turned into cash with which to pay your creditors. In most cases, a debtor’s assets (personal property and residential real estate) are fully exempt, so the surrender or sale of an individual’s assets are the exceptions, rather than the rule.
- Chapter 11 - This is a reorganization bankruptcy primarily used by businesses wishing to repay their creditors while continuing to operate their business. There is no Trustee unless the Judge decides that one is necessary. If a Trustee is appointed, the Trustee takes control of the business and property.
- Chapter 12 – This type of reorganization bankruptcy is used to help family farmers or family fishermen to repay their debts. It is similar to a Chapter 13 bankruptcy, but allows these specific debtors a higher debt limit.
- Chapter 13 – This type of reorganization bankruptcy can only be used by individuals with enough income to repay some or all of their debts. A payment plan is created which allows debtors to make payments to their creditors over a specified period of time (between 3 to 5 years). Individuals whose income is too high to qualify for Chapter 7 bankruptcy may be eligible to file bankruptcy under Chapter 13, but there are debt limits with this form of bankruptcy, although the limits are fairly high. You can usually keep your property, but you must earn wages or have some other source of regular income and must agree to pay part of the income to your creditors through a Chapter 13 Payment Plan. The Court must review and approve your Chapter 13 Payment Plan and your budget. A Trustee is appointed and will collect the payments from you, pay your creditors a proportionate share of the available funds, and make sure you live up to the terms of the Payment Plan.
In all cases, you are required to obtain credit counseling and attend debt management classes as part of the bankruptcy process. In addition, you need to be aware that certain debts cannot be eliminated through bankruptcy. Further, income and debt limitations exist related to the different forms of bankruptcy, and there are always risks of losing your property during bankruptcy. An experienced bankruptcy lawyer can help ensure that you understand all of your responsibilities as well as your rights when filing for bankruptcy in Texas.
An experienced and knowledgeable Dripping Springs, Texas Bankruptcy Attorney can provide valuable guidance through the bankruptcy process and help you to maintain most, if not all, of your assets.
Contact an Experienced Dripping Springs Bankruptcy Attorney
An experienced Dripping Springs, Texas Bankruptcy Attorney can also help you determine whether you are eligible to file for bankruptcy protection and, if so, which chapter best suits your specific set of circumstances. If you are considering bankruptcy protection, it is important to get solid legal advice before moving forward, so please reach out to The Daniel Law Firm. We take great pride in serving clients all over Central Texas. Let us discuss the best strategy for moving your Bankruptcy case forward in both a positive direction and timely manner. Contact an Dripping Springs, Texas Bankruptcy Attorney at The Daniel Law Firm today at (512) 615-3569.
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