How Filing Bankruptcy in Texas Can Help with Your Finances

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For the majority of individuals, filing for bankruptcy in Texas will encompass filing either Chapter 7 or Chapter 13. The majority of benefits from either chapter of bankruptcy are case-specific, meaning the benefits derived will based on the specific types of debts held, the intentions of the debtor, and the influence of state laws (specifically in Chapter 7) in light of federal bankruptcy law. In short, determining how bankruptcy may benefit any given individual or household will require the case-specific insight of a bankruptcy lawyer. The following article generally outlines how either Chapter 7 or Chapter 13 will help with a debtor’s finances.

Chapter 13 Bankruptcy in Texas

Chapter 13, also known as the reorganization and repayment form of bankruptcy, will entail a debtor repaying the bulk of his or her debts over a three (3) to five (5) year period under the supervision of the courts. Debtors may be eligible for discharge or hardship based discharge of certain debts in limited instances. The benefits of Chapter 13 will include the following:

  • Unlike Chapter 7, which has significant barriers of eligibility, Chapter 13 has limited requirements pertaining to eligibility, and in turn, most debtors will be afforded the chance to file under Chapter 13.
  • Chapter 13, like Chapter 7, implements an automatic stay provision, preventing any future creditor collection attempts until the bankruptcy case is resolved. This may stall foreclosures, repossessions, liens, and wage garnishments until the resolution of the case. Depending on how a case proceeds, a debtor may be able to retain most, if not all of his or her property during the Chapter 13 process.
  • Chapter 13 allows repayment of debts, while also taking into account the current income and repayment abilities of a debtor. In short, the repayment plan is set up in a manner making it manageable to the debtor, while also satisfying the majority of creditor claims over time.
  • While filing bankruptcy undoubtedly creates a blemish on one’s financial history, the reality is that resolving bad debts via Chapter 13 will likely improve one’s credit scores over time, when compared to allowing debts expire under statutes of limitations laws.

Chapter 7 Bankruptcy in Texas

Chapter 7 bankruptcy, also known as liquidation and discharge form of bankruptcy, presents a state-specific opportunity to debtors filing in the state of Texas in the form of exempt assets lists. In short, the exempt assets list, which does vary widely from state to state, will outline what property a debtor may claim as exempt during the Chapter 7 liquidation process. Other benefits in Chapter 7 include:

  • Chapter 7 allows discharge of unsecured debts, which includes credit card debt and medical debt. While the price of the discharge is liquidation of all other non-exempt assets, the state of Texas has a relatively favorable exempts list, allowing certain debtors to retain the bulk of their personal property and benefits.
  • As mentioned above, Chapter 7 filings automatically invoke an automatic stay provision, preventing creditor collection attempts until the resolution of the bankruptcy case.
  • Though not as intensive as Chapter 13, Chapter 7 filings allow for reorganization and repayment of non-dischargeable debts, especially in the sense that the weight associated with unsecured debts being repaid is no longer an issue following discharge.

Getting Legal Help with Filing Bankruptcy in Texas

In brief, only a bankruptcy lawyer, with sufficient insight into the case-specific considerations of your personal debt issues, can make an informed determination on what the benefits of bankruptcy may be in your case. For more information and insight, including direction on how to proceed with filing for bankruptcy in Texas, consult with a Texas bankruptcy attorney to learn more.