Bankruptcy
Bankruptcy covers federal and state insolvency laws and regulations; during bankruptcy, a court controls the estate (the property and other assets) of a debtor (a person or business who owes money to others) for the benefit of creditors (a person or business that is owed money).
Commercial Bankruptcy
Federal bankruptcy law is organized into "Chapters," which govern specific types of bankruptcy proceedings. A business can file for bankruptcy under either "Chapter 7 or Chapter 11. Chapter 7 or "straight bankruptcy" involve the complete liquidation of the debtor's estate. Chapter 11 or "business bankruptcy" allows business bankruptcy reorganizations.
Consumer Bankruptcy
Personal Bankruptcy takes place when a court administers the estate of a debtor for the benefit of creditors.
A debtor is a person or business who owes money to others. A debtor may choose to file a bankruptcy proceeding, to resolve a hopeless financial situation, or to put off the collection of debts for a period of time to allow for financial reorganization.
Bankruptcy In Texas
Bankruptcy is an option to consider if you:
Chapter 7, otherwise known as "liquidation," is the simplest form of bankruptcy and is available to individuals, married couples, corporations and partnerships. A trustee (appointed by the court) gathers and sells your non-exempt property and uses the proceeds from the sale to pay your creditors.
Federal bankruptcy laws provide for a "means test" which will determine whether you are eligible to file of Chapter 7 bankruptcy. If your income is below the median income, you will be eligible. If you make more than the median income, your income over the past six months is considered, along with mortgage and car payments, back taxes and child support due, and school expenses up to $1,500 per year. You will not be eligible for a Chapter 7 bankruptcy if, after deducting these amounts, you can still pay at least $6,000 ($100/month) to unsecured creditors over five years. If you do not qualify for a Chapter 7 bankruptcy, your only option would be a Chapter 13 bankruptcy.
For Texas, for cases filed after February 1, 2008, the median income for a single wage earner is $36,285; for a family of two, it is $51,355; for three, $53,803; and for four, $61,511. Add $6,900 for each individual in excess of 4.
Filing Chapter 7
A bankruptcy starts with the filing in court the official petition and a Statement of Financial Affairs. This statement contains extensive schedules requiring a detailed list of all your debts. Debts that are not listed in the statement will not be discharged at the completion of the bankruptcy proceeding. Failing to list assets in an attempt to hide them from creditors may result in the denial of discharge or charges of bankruptcy fraud.
Creditors are prevented from trying to collect on your debts because of an "automatic stay." The stay is designed to preserve your property and to give you a relief from lawsuits.
After the bankruptcy is filed, you must appear at the "first meeting of creditors" (also called a "341" meeting). After the 341 meeting you will have to cooperate with the trustee in providing any requested information.
Creditors have 60 days after the 341 meeting to convince the bankruptcy court you should not be allowed to dump your debts.
What Can I Keep?
In Texas you have the choice of using either the federal exemption statutes or the Texas exemptions. A bankruptcy does not wipe out voluntary liens, like mortgages and deeds of trust, or tax liens. So the lender still has the right to foreclose if you do not pay.
If you still owe money on the car, you can choose to reaffirm the debt to the secured lender. Under the new law, you have to reaffirm your car loan within 45 days after the 341 meeting. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.
You also have the option to redeem the car within 45 days of the 341 meeting by buying it from the secured creditor in a single payment for its present value.
Chapter 13 Bankruptcy
If you are an individual or a sole proprietor, you can file a Chapter 13 bankruptcy to pay off all or part of your debts over five years. Rather than wiping out debts immediately, this option allows you to reorganize them so you have time to pay.
Many people who file Chapter 13 bankruptcies have:
The filing of the Chapter 13 petition must be accompanied by a proposed payment plan extending over three to five years. The payment plan must provide for the payment of all "priority claims", such as taxes, in full. All tax returns for the four years prior to filing for bankruptcy must be filed.
The bankruptcy trustee appointed by the Bankruptcy Court must review the proposed plan for accuracy and feasibility. If the plan is approved, you can keep all your assets during the period of the plan. You make monthly payments to the bankruptcy trustee, who distributes the funds to the creditors according to the plan. If the plan is completed as approved, your unpaid debts are "discharged."
Commercial Bankruptcy
Federal bankruptcy law is organized into "Chapters," which govern specific types of bankruptcy proceedings. A business can file for bankruptcy under either "Chapter 7 or Chapter 11. Chapter 7 or "straight bankruptcy" involve the complete liquidation of the debtor's estate. Chapter 11 or "business bankruptcy" allows business bankruptcy reorganizations.
Consumer Bankruptcy
Personal Bankruptcy takes place when a court administers the estate of a debtor for the benefit of creditors.
A debtor is a person or business who owes money to others. A debtor may choose to file a bankruptcy proceeding, to resolve a hopeless financial situation, or to put off the collection of debts for a period of time to allow for financial reorganization.
Bankruptcy In Texas
Bankruptcy is an option to consider if you:
- Can only pay minimum amounts on your bills.
- Cannot get out of debt within five years.
- Have been notified that your mortgage or loans are being foreclosed.
- Have had a severe financial setback, such as losing your job, a divorce or a costly illness.
Chapter 7, otherwise known as "liquidation," is the simplest form of bankruptcy and is available to individuals, married couples, corporations and partnerships. A trustee (appointed by the court) gathers and sells your non-exempt property and uses the proceeds from the sale to pay your creditors.
Federal bankruptcy laws provide for a "means test" which will determine whether you are eligible to file of Chapter 7 bankruptcy. If your income is below the median income, you will be eligible. If you make more than the median income, your income over the past six months is considered, along with mortgage and car payments, back taxes and child support due, and school expenses up to $1,500 per year. You will not be eligible for a Chapter 7 bankruptcy if, after deducting these amounts, you can still pay at least $6,000 ($100/month) to unsecured creditors over five years. If you do not qualify for a Chapter 7 bankruptcy, your only option would be a Chapter 13 bankruptcy.
For Texas, for cases filed after February 1, 2008, the median income for a single wage earner is $36,285; for a family of two, it is $51,355; for three, $53,803; and for four, $61,511. Add $6,900 for each individual in excess of 4.
Filing Chapter 7
A bankruptcy starts with the filing in court the official petition and a Statement of Financial Affairs. This statement contains extensive schedules requiring a detailed list of all your debts. Debts that are not listed in the statement will not be discharged at the completion of the bankruptcy proceeding. Failing to list assets in an attempt to hide them from creditors may result in the denial of discharge or charges of bankruptcy fraud.
Creditors are prevented from trying to collect on your debts because of an "automatic stay." The stay is designed to preserve your property and to give you a relief from lawsuits.
After the bankruptcy is filed, you must appear at the "first meeting of creditors" (also called a "341" meeting). After the 341 meeting you will have to cooperate with the trustee in providing any requested information.
Creditors have 60 days after the 341 meeting to convince the bankruptcy court you should not be allowed to dump your debts.
What Can I Keep?
In Texas you have the choice of using either the federal exemption statutes or the Texas exemptions. A bankruptcy does not wipe out voluntary liens, like mortgages and deeds of trust, or tax liens. So the lender still has the right to foreclose if you do not pay.
If you still owe money on the car, you can choose to reaffirm the debt to the secured lender. Under the new law, you have to reaffirm your car loan within 45 days after the 341 meeting. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.
You also have the option to redeem the car within 45 days of the 341 meeting by buying it from the secured creditor in a single payment for its present value.
Chapter 13 Bankruptcy
If you are an individual or a sole proprietor, you can file a Chapter 13 bankruptcy to pay off all or part of your debts over five years. Rather than wiping out debts immediately, this option allows you to reorganize them so you have time to pay.
Many people who file Chapter 13 bankruptcies have:
- Mortgages they would like to bring current, so they do not lose their homes or other property.
- Taxes, child support or student loans that cannot be wiped out by Chapter 7 bankruptcy
The filing of the Chapter 13 petition must be accompanied by a proposed payment plan extending over three to five years. The payment plan must provide for the payment of all "priority claims", such as taxes, in full. All tax returns for the four years prior to filing for bankruptcy must be filed.
The bankruptcy trustee appointed by the Bankruptcy Court must review the proposed plan for accuracy and feasibility. If the plan is approved, you can keep all your assets during the period of the plan. You make monthly payments to the bankruptcy trustee, who distributes the funds to the creditors according to the plan. If the plan is completed as approved, your unpaid debts are "discharged."