Bankruptcy Texas

What is Bankruptcy?

When a person or business is financially incapable of repaying currently outstanding debt, they may consider filing for bankruptcy. The initial step of the process of filing for bankruptcy consists of a petition. Typically a petition is filed by the debtor, although in some cases the creditor may file the petition. Following the petition filing, the assets of the debtor are evaluated to determine value. The assets may then be used as a form of repayment of currently outstanding debts.

In accordance with federal law, debtors who are unable to repay outstanding debt have the right to file for bankruptcy. When you file for bankruptcy, creditors are immediately given notice to refrain from further attempts to collect debts until a judgment is reached on your bankruptcy claim in accordance with federal bankruptcy law.

Bankruptcy is a useful financial tool that can help debtors when they are unable to repay their debts. Through the process of bankruptcy, it becomes possible to be forgiven of the legal obligation to repay some, or all outstanding debts which is referred to as “discharge of debts”. An attorney from Brandy Austin Law Firm, PLLC will be able to explain viable bankruptcy options and assist with making a plan of action.

Advantages of Bankruptcy

There are a number of ways bankruptcy can help a person avoid complete financial devastation by helping to prevent loss of personal property or assets such as:

• Stopping foreclosure on a house or real estate property.
• Prevent repossession of a car or other property, and can also require the creditor to return property after repossession.
• Halt wage garnishment, debt collection harassment, and intrusive actions to collect debt.
• Gain the ability to challenge creditor claims who may have committed fraud or are attempting to collect more than is actually owed.

Bankruptcy is not an easy way around financial problems, rather it is a tool for lessening the impact of the legal repercussions that may come with being unable to repay your debts. That being said, bankruptcy is only viable for people under certain circumstances. 

Consulting a bankruptcy attorney prior to beginning the process is an essential step to understanding if bankruptcy is a viable option for relieving debt. A bankruptcy attorney from Brandy Austin Law Firm, PLLC will be able to explain if the bankruptcy path is appropriate based on the circumstances of the debtor.

Types of bankruptcy

Under federal law, there are four types of bankruptcy cases that apply to individuals.

• Chapter 7 – commonly referred to as “liquidation” or “straight” bankruptcy. Chapter 7 requires the individual to relinquish property or assets that are not “exempt”. The status of their property as “unexempt” is determined through an evaluation of all property. The unexempt property may be sold to help repay creditors. In many cases, individuals who file for bankruptcy keep all of their very valuable property.
• Chapter 11 – also referred to as “reorganization”. Chapter 11 bankruptcy is typically used by businesses or individuals whose debts are very large.
• Chapter 12 –  reserved for family farmers and fishermen.
• Chapter 13 – another form of “reorganization”. Chapter 13 is used by individuals to repay all or some of their debts based on their current level of income, over the course of a set number of years as determined through bankruptcy proceedings. Chapter 7, and Chapter 13 are the most commonly filed for by individuals.

How does bankruptcy affect credit?

Generally speaking, bankruptcy can appear on your credit report for ten years from the date of filing for bankruptcy, but since bankruptcy eliminates old debts, debtors are likely in a better position to pay current bills. In some cases individuals are able to receive new credit. Generally, an individual’s credit score will improve significantly within 18 to 24 months after the bankruptcy discharge. 

Bankruptcy is probably your last choice in the face of foreclosure and other extreme financial woes. After trying everything else, bankruptcy is the only legal process to relieve you from your extreme debt and help you move toward a better financial future. This does not mean that the bankruptcy process is easy. When you file, you must explain to the bankruptcy trustee or the judge how you came into this financial situation and why it can only be remedied by filing for bankruptcy. Then the court will require you to hand in a list of all your debts and assets so they can determine how to handle your bankruptcy estate.

Before contacting a bankruptcy lawyer for assistance with this process, you may first want to know what to expect from the bankruptcy process.

Asset Division and Debt Classification:

The two categories that your assets will be placed in are:

1. Exempt Assets: These assets will not be used to pay off your outstanding debt. Some assets that may qualify are personal items and some equity in your home and/or car.
2. Non-Exempt Assets: These assets are applied towards your debt and will be seized to pay off your accounts. Any real estate property besides your home, any recreational motor vehicles, and other items may be subject to seizure.

Your debts are also divided into two groups:

1. Secured Debts: Loans are included when the creditor still has security interest in the property that was originally provided as collateral for the loan. This applies to second homes, recreational vehicles, cars, and other similar purchases.
2. Unsecured Debts: These debts do not deal with property, this is usually the debt associated with credit cards, personal loans, medical bills, etc.

The non-payment of secured debt may result in the creditor claiming collateral property, which makes it especially important in bankruptcy court. 

After all the required information gets filed in court, your bankruptcy estate is assigned a trustee to pay off your secured debt in the allotted time period. In order for the trustee to do this, the court places a “stay” on creditors preventing them from foreclosing or confiscating any of your property. They are also not allowed to file a lawsuit against you for your outstanding balance.

What Chapter Should You File For?

1. Chapter 7 Bankruptcy: This chapter is typically chosen by low income earners with few assets. This option allows you to liquidate, keep exempted assets, and discharge unsecured debts. Non-exempt assets are put towards payment of your debts, but student loans, taxes and unpaid child support are not dissolved.
2. Chapter 13 Bankruptcy: Individuals who prefer keeping their non-exempt property will choose this option, or they are trying to get more time to fight foreclosures. Chapter 13 reorganizes your debt and creates a payment plan that takes about three to five years to pay off your debt. Your trustee will collect your payments and pass them along to your creditors. Now you may keep your property without fearing foreclosure or seizure.

Why Consult with Bankruptcy Lawyers in Arlington TX

Filing for bankruptcy can be a very complex, yet ultimately advantageous, process. Bankruptcy laws are often changing, so without any legal knowledge, the paperwork and different schedules or codes can appear overwhelming – even discouraging. By retaining representation from Arlington TX bankruptcy lawyers, you can feel confident in knowing the process will go as smoothly as possible. Our lawyers take the time to understand your clients’ personal situations and any special circumstances. We analyze physical and financial assets, and discuss the possibility of what clients may or may not be able to keep through careful exemption planning.

If you’re falling behind on medical bills or a mortgage due to unforeseeable circumstances, job loss, divorce, and so forth, bankruptcy may help to save your home or prevent you from being hounded by creditors. Skilled Bankruptcy lawyers Arlington TX offers to individuals and families may navigate the laws so that you get the most advantage from filing for bankruptcy. If you’re unsure of how this process may be beneficial to you, consider the following:

Get a Fresh Start

You are not forced to file for bankruptcy, and could avoid it through alternative solutions such as negotiation with creditors. Sometimes, this path will work out in your favor, but often it’s a short term solution, and leads to the eventual loss of a home or repossession of loaned assets. Filing for bankruptcy from the beginning may give you a fresh start, and actually save you time and money in the long run.

Saving Your Home from Foreclosure

It’s prudent to retain bankruptcy lawyers Arlington TX offers to its residents as soon as you think it may be a viable option for your situation. If you wait too long, you could lose your home. Depending on the type of bankruptcy you file, you could be absolved of any and all debt. In cases of Chapter 7 bankruptcy, you may have to sell your home to repay owed debts; however, filing Chapter 13 may enable you to pay your debts and save your assets from foreclosure. A lawyer can help you to make a prudent decision on which type of bankruptcy is right for you.

Feel Peace of Mind

When it comes to financial burdens and the thought of losing your assets, feelings of worry or anxiety could quickly arise. Bankruptcy lawyers Arlington TX residents count on may help to see that proceedings are carried out as diligently as possible. A lawyer may ultimately save you time, money, and future headaches, while giving you total peace of mind.

Should I seek bankruptcy help from a debt settlement company?

Many bankruptcy lawyers Arlington, TX residents rely on know that clients who are struggling financially will sometimes consider working with debt settlement companies before they think about filing for bankruptcy. As top Arlington bankruptcy lawyers, the team at Brandy Austin Law Firm, PLLC also knows that quite often, working with one of these companies can leave a person owing even more debt.

Some studies show that debt can grow by as much as 20 percent more than before the person consulted with the settlement company, even if no settlement is ever reached with the creditor.

One of the tactics that debt settlement companies use to lure customers is to convince them that they will be able to significantly lower the customer’s debt by negotiating settlements with their creditors. They typically tell customers they will be able to pay off their debt in one lump sum for much less than what they owe.

Once a customer starts working with a settlement company, the company has the customer stop making all payments to the creditors. Instead of sending the payments to the creditor, the customer gives those funds to the settlement company. Those funds are then deposited in a special account which is used to pay the creditors — if and when the creditor and settlement company come to a negotiated settlement amount. The typical fee the settlement company charges is a percentage of the amount the customer owes the creditor.

It is generally not a good idea to simply stop paying a creditor, even when working with a debt settlement company. When a person stops making debt payments, their account then goes into default. When a person follows the instructions of a debt settlement company, their loan is now in a default status, which means they could accrue late fees and additional interest, depending on the terms of the contract. As bankruptcy lawyers Arlington, TX residents depend on may explain, by being in default, the customer would be at risk of a lawsuit if the creditor decides to sue the customer.

Another factor that bankruptcy lawyers Arlington, TX consumers rely on are aware of is that some creditors will not even consider negotiating with debt settlement companies. In fact, it is quite common for a creditor to become even more aggressive in their collection efforts once they find out a customer has hired a debt settlement company. Creditors that will negotiate may have standard guidelines regarding how much of the debt they are willing to forgive. They might not deviate from those guidelines, regardless of whether they are negotiating with the settlement company or the customer directly.

I Am Filing for Bankruptcy. Do I Still Need to Pay My Child Support?

Bankruptcy lawyers at Brandy Austin Law Firm serving the Arlington, Texas community know that it is not uncommon for people to file for bankruptcy at some point after they have gone through a divorce. Divorce can be expensive and leave many people with more debt than income. Bankruptcy is often the best choice to start with a clean slate.

However, if you are someone who has been ordered to pay child support, it is important to know that your bankruptcy filing will not affect your legal obligation. You are required to continue to make your child support payments just as you have been ordered to, regardless of what the status of your bankruptcy filing is.

Trusted bankruptcy lawyers in Arlington, TX can tell you there are two different types of personal bankruptcy a person can file, chapter 7 and chapter 13. Chapter 7 bankruptcy entirely erases a person’s debt. This is done by selling whatever assets the person may have to pay their creditors. Whatever debt is left over is canceled by the court.

Chapter 13 bankruptcy is more of a reorganization of debt. The trustee of the bankruptcy case will reorganize the person’s debt and set up a new payment schedule. This schedule is based on the individual’s income. After three years, whatever debt is still remaining is canceled by the court.

There are certain debts that cannot be canceled by bankruptcy. These are referred to as priority debts and include tax obligations, student loans, and child support obligations. Even with good Arlington, TX bankruptcy lawyers, parents are required to continue to make child support payments as the bankruptcy process is going on.

In fact, in order to receive a discharge from the bankruptcy court, a parent must be current in their child support obligation. Since filing bankruptcy immediately brings to a halt the requirement of paying all of the other debts a person may have, the courts feel they should use these extra funds to pay off any back child support obligation owed.

Once the bankruptcy process has been completed and all of the debts discharged, a parent may consider filing a petition to modify their child support obligation. If the reason for the paying parent’s bankruptcy was due to circumstances such as job loss or medical issues, and they can show the court that they now have a substantial change in income, the family court judge may lower their child support obligation if it falls under different guideline amounts. Good bankruptcy lawyers for Arlington, TX can help you make your argument.

Contact Brandy Austin Law Firm, PLLC

Our firm is well prepared to represent clients in need of an experienced bankruptcy attorney in Texas. If you feel that you may be facing circumstances which may warrant bankruptcy, we encourage you to contact Brandy Austin Law Firm, PLLC to schedule a free initial consultation.