Bankruptcy is a legal status of an individual, couple or entity that cannot settle their debts to creditors. Bankruptcy affords debtors financial reprieve since it limits the collection of debt. However, before filing for bankruptcy, you need to understand what options are available to you by consulting a bankruptcy lawyer in Austin, Texas.
What Are Your Options When Filing For Bankruptcy in Texas?
The majority of the bankruptcy cases filed in the United States are either under chapter 7 or Chapter 13. Your attorney will advise you on which is the best option depending on your income, debts, financial goals, and assets.
Filing For Bankruptcy Under Chapter 7
This is a liquidation bankruptcy that wipes out your unsecured debts including your medical expenses and credit cards. People who qualify for Chapter 7 bankruptcy have little or zero disposable income. You have to undergo and pass the ‘means test’ that is used to determine your income level. If your annual income is below the annual median income, you can file for bankruptcy under Chapter 7. If it is more, you could qualify after deducting some predetermined expenses.
Chapter 13 Bankruptcy
This type of bankruptcy is available to persons with a higher than average income. Apart from individuals, this is also available to small unincorporated businesses. As the debtor, you will need to repay some or all of your debts, and the court oversees the repayment. This includes the processing of payments through the office of a Chapter 13 trustee. Your attorney will help you identify what debts you should repay and which ones can be wiped out.
Specific Texas Bankruptcy Options
Unlike in other states, in Texas, you can choose between Texas’ exemptions or Federal bankruptcy exemptions. Through state home exemptions, you can retain your home or property’s value. Other regulations allow you to retain other properties such as your car, livestock, and farming equipment.
It is vital that you choose an avenue that’s suitable to you as an incorrect decision could hurt your financial situation more harm than good. While no one anticipates a situation where bankruptcy is the only option, making a proactive decision by seeking out a credible attorney referral service is the first step towards financial recovery.
Once you complete your payments, the court will close your case and grant you a discharge notice either through a court hearing or via mail.
What Does Bankruptcy Do For You?
Bankruptcy will help you:
- Stop any foreclosure on your home and enable you to catch up with missed payments. However, this does not eliminate mortgage or other liens on your home without payment.
- Challenge creditors’ claims who might have committed fraud or who are trying to collect more than you owe.
- Stop any debt collection harassment and related creditor actions against you.
- Prevent the repossession of your car or any other property.
Although filing for bankruptcy is a viable alternative for individuals and businesses, it is not the best option for everyone. If you are considering filing for bankruptcy in the central Texas area, contact the Austin Lawyer Referral Service. We have a vast network of highly skilled and proficient lawyers who will advise you on what options are available specifically to you. Contact us at 512 472 8303.