Bankruptcy Lawyer Serving Brazoria, Fort Bend, Galveston, Matagorda and Harris Counties

Chapter 7 - Liquidation or Straight Bankruptcy

In a Chapter 7 bankruptcy the debtor does not attempt to pay back creditors. It is designed for debtors who do not have the ability to pay even a portion of their debts. Debtors whose debts are primarily consumer debts are subject to a "means test" to determine whether they are permitted to file bankruptcy under Chapter 7. The federal government determines the median income for your geographical region and family size. If your income is greater than the median income for your region and family size you may not be permitted to file bankruptcy under Chapter 7.

A debtor may claim certain property as exempt under governing law. Most household items and necessities will be considered exempt. The Trustee may have the right to take possession of remaining non-exempt property and use the proceeds from the sale of the property to pay off creditors.

A Chapter 7 bankruptcy will result in the discharge of certain debts. Debts that may be eliminated are credit card debt, medical bills, unsecured loans, lines of credit, foreclosure deficiencies, repossession deficiencies and most judgments. The debtor will still be responsible for most taxes, student loans, child support, property settlement obligations and other exceptions. Please call our office to consult with an attorney regarding your specific circumstances.

If the debtor is current on their home and/or car payments they may be able to "reaffirm" the debts and continue to make the payments and retain the property.

Approximately four weeks after the Chapter 7 petition is filed the debtor attends a Meeting of Creditors. The debtor is asked some basic questions about their financial situation. If everything is satisfactory the Court issues a Discharge Order approximately two months after the Meeting of Creditors.

Chapter 13 - Wage Earner's Plan

The Chapter 13 bankruptcy differs from the Chapter 7 bankruptcy in that the debtor agrees to pay a portion or all of their debts over a period of three to five years. This is referred to as a Payment Plan and is designed for debtors with regular income. The Court must approve the plan before it can take effect. The debts are discharged after completion of the plan. However, as in a Chapter 7 bankruptcy certain debts are not dischargeable.

One advantage of the Chapter 13 bankruptcy is that it may be possible for the debtor(s) to make up an arrearage on their home mortgage during the life of the plan, thus preventing a foreclosure on the home.

Call for a initial consultation if you are considering filing for bankruptcy to obtain relief from your creditors.