Positive SSL

Chapter 7 Bankruptcy

Texas Chapter 7 Bankruptcy Lawyer

What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is the most frequently filed type of bankruptcy (65% of consumer filings), and when the word ”bankruptcy“ is mentioned, Chapter 7 comes to mind for most people. Also called liquidation bankruptcy, Chapter 7 requires liquidation of certain assets to pay creditors.

Some assets are exempt from liquidation. You have the choice of using Texas State exemptions or exemptions covered under federal statutes. Your bankruptcy attorney can help you decide which statutes best benefit your situation. Chapter 7 generally is used when you have credit card or other unsecured debt but few assets. You can keep a significant amount of exempt property through the bankruptcy process, while still discharging your debts. Typically, exempt assets include items such as your home, vehicle, home furnishings, personal effects, wages, retirement plans, and the cash value of life insurance policies.

Because Chapter 7 is reserved for individuals whose income level is inadequate for significant repayment of debts, household income level is a major consideration in Chapter 7 eligibility. If the court believes you can cope with repayment, your petition will be dismissed, and the court will advise Chapter 13 bankruptcy instead.

There are advantages and disadvantages to filing Chapter 7, and your bankruptcy attorney can explain, advise, and help you decide which type of bankruptcy is right for you.

Chapter 7 Bankruptcy Process

The main elements of the Chapter 7 bankruptcy process include:

  • Your bankruptcy lawyer files documents with the bankruptcy court regarding your income, expenses, debts and assets.
  • The bankruptcy court assigns a trustee who will review your documentation to ensure you meet all the requirements for Chapter 7 and are eligible for a discharge.
  • An automatic stay goes into effect when bankruptcy is filed, which means that creditors may not pursue lawsuits against you, and repossession and wage garnishments cease. You should refer all debt collection attempts to your bankruptcy lawyer.
  • About 30 days after your bankruptcy petition is filed, the trustee holds a creditors’ meeting that you, your bankruptcy lawyer (and spouse if joint filing) must attend. Creditors seldom attend the meeting, but if any do, they may ask questions regarding your property and finances. In order to receive a discharge, you must testify under oath, be truthful, and cooperate with the trustee.
  • The trustee will examine your documentation to verify accuracy and also will determine which assets are exempt. The trustee will sell non-exempt assets of value and distribute the net proceeds to your creditors.
  • Generally, a discharge is issued about 60 days from the date of the initial creditors’ meeting. A copy of the discharge is mailed to the debtor and creditors listed in the bankruptcy case.

Debts dischargeable through Chapter 7

While not a complete list, here are some debts dischargeable through Chapter 7

  • Unsecured debts
  • Credit card debt more than 60 days old
  • Signature loans
  • Medical bills
  • Certain taxes
  • Most judgments and garnishments
  • Repossession debts
  • Past utility bills
  • Eviction/broken lease debt

Debts not dischargeable through Chapter 7

Chapter 7 discharge is not allowed for:

  • Most student loans
  • Child support
  • Spousal maintenance
  • Certain federal and state taxes due in the last 3 years
  • Credit card debt incurred within 60 days of filing bankruptcy
  • Certain debts acquired within a short time before bankruptcy filing
  • Debts created by illegal activity such as fraud, false representation, or embezzlement
  • Criminal or civil fines or penalty judgments owed to governmental bodies or agencies
  • Debts for injury caused by driving while intoxicated

Your bankruptcy attorney can advise you on any other debts you will not be able to discharge under Chapter 7 bankruptcy. With the legal help of a bankruptcy lawyer, most Chapter 7 bankruptcies are not complicated and require only one brief appearance with the trustee at the creditors’ meeting. On average, this type of bankruptcy takes four to six months to finalize and gives debtors the opportunity for a fresh start.

Financial insolvency often seems overwhelming. The Law Office of Areya Holder understands your struggle with debt and encourages you to seek our legal guidance in dealing with financial troubles. We offer a free initial consultation to discuss whether Chapter 7 is right for you.

  • Contact us online, or call our office at (972) 438–8800 today.

    Serving clients in Collin, Cook, Dallas, Denton, Grayson, Tarrant, and Red River counties, including the communities of Arlington, Carrollton, Cedar Hill, Dallas, Denton, DeSoto, Euless, Grand Prairie, Irving, Las Colinas, and Plano.