Which is Right for You?
Millions of Americans have utilized these debt relief options over the years in the wake of an unexpected financial crisis or insurmountable debt in order to regain their independence and a sense of stability for themselves and their loved ones. If you think that bankruptcy might be right for you, read on to learn more about the most common chapters and which type may best for you.
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Who Can File?
You can file for bankruptcy if you cannot repay your debts. If your monthly income is lower than the median income for households similar to yours in your vicinity - or if you have low disposable income - you may qualify for Chapter 7 bankruptcy. You will need to pass the "means test" to determine whether you are eligible to file this chapter. To qualify for a Chapter 13 bankruptcy, you will need to have sufficient income to ensure that you will be able to repay your debts over time. In addition, you will need to be up-to-date on filing all of your income tax returns.
You will not be eligible for Chapter 13 bankruptcy if:
- Your income is insufficient or erratic;
- Your secured debts are more than $1,149,525 in total; and / or
- The amount of your unsecured debts exceeds $383,175.
Chapter 7 Bankruptcy: Benefits & Outcomes
Chapter 7 or "liquidation" bankruptcy results with a discharge of most, if not all, of your debts. Almost all of your unsecured debt can be discharged in a Chapter 7 bankruptcy, though some unsecured debts may not be wiped out. This process also puts an immediate stay on your creditors - meaning that they will not be able to freeze your bank accounts, shut off your utilities, garnish your wages, or pursue any other forms of debt collection.
If you are eligible for Chapter 7, you will likely retain all of your assets. In certain, limited circumstances, you may have to surrender some of your property to the bankruptcy trustee in order to repay your creditors. Some forms of property are "exempt" from seizure by creditors. Most states have exemption laws in addition to the exemption laws provided by the bankruptcy code. In Texas, you can choose to use either the state or the federal exemption list. An experienced bankruptcy attorney from our firm can help you decide which exemption list is better for you to use, and may be able to help you protect your property entirely.
Chapter 13, or "reorganization," bankruptcy allows you to cancel some of your debts and repay the rest in manageable dividends over a period of three to five years. This chapter is a good choice for those who need more time to catch up on their mortgage or car loan payments but wish to keep their original agreement with the lender. Others may choose to file under Chapter 13 because they have substantial nonexempt assets or because they wish to protect a cosigner on a debt.
Chapter 13 could allow you to keep your property while giving you extra time to repay your debts. While some Chapter 13 filers pay back 100 percent of what they owe, others only have to pay back as little as 20 percent of their total debt. If you have a desire to pay back your loans and / or protect your property, Chapter 13 may be the right solution for you.
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The lawyer who leads our firm has been practicing since 1983. Attorney Marilyn D. Garner understands what you are facing and is intimately familiar with the laws that affect your situation.
We understand your debt situation is unique. No two cases are alike, and they shouldn't be treated as if they were. We do not handle our cases with a "cookie cutter" approach because we believe in giving each client the attention and care they need on an individual level.
Don't just take our word for it: Schedule a free case evaluation with our experienced Grand Prairie bankruptcy lawyer today. During this meeting, Attorney Garner can offer you advice tailored to your needs and help you assess which bankruptcy chapter is right for you - or whether one of the many bankruptcy alternatives available would be a better solution.