Texas Bankruptcy Lawyers

Many people consider bankruptcy as a way to find relief from mountains of debt and creditor harassment, but it can be difficult to understand the differences between Chapter 7 and Chapter 13. If you have been searching for a way to take back control of your finances and finally achieve financial freedom, it is important to understand the differences between the two main types of consumer bankruptcy.

Chapter 7
This Chapter helps filers overcome their debts by using the liquidation of assets to repay creditors. In order to file for Chapter 7 you must first be able to pass a means test, and then the court must approve your petition. A court-appointed bankruptcy trustee will then oversee the process and gather nonexempt assets to liquefy. The funds obtained through liquidation will then be distributed to the creditors and the debtor will be discharged from the balance of most types of remaining debts.

Chapter 13
This Chapter of bankruptcy enables the filer to repay their debts through a court-approved payment plan. Chapter 13 uses the reorganization of debts so that the debtor can repay their creditors through payment plans that last between 3 and 5 years. If you file for this Chapter a court-appointed bankruptcy trustee will work with you to create a repayment plan of single, manageable monthly payments, and at the end of the process you will be released from the remaining balances of most types of debt.

Assessing Your Unique Situation

After understanding the distinctions between Chapter 7 and Chapter 13, you will need to consider the other factors that will influence your available options and the benefits you could obtain from filing for bankruptcy. Bankruptcy can be confusing and complicated, so it is important to discuss your case with a knowledgeable Arlington bankruptcy attorney before making a choice. It is also helpful to think through the following questions to enable you to better understand which Chapter may be best for your financial circumstances.

  • Can I pass the means test? In order to qualify for Chapter 7 bankruptcy, you must first pass the means test. If you are not eligible for this Chapter, you can still pursue debt relief through Chapter 13, which does not require debtors to qualify through the means test.
  • When do I hope to be finished with bankruptcy? Chapter 7 allows debtors to finish the bankruptcy process within a year in the majority of cases, though not everyone is eligible to file. Chapter 13 does not require debtors to meet the qualifications of Chapter 7, and debtors are able to repay their creditors through monthly payments over a 3 to 5 year period.
  • Do my debts qualify to be discharged? Many people file for bankruptcy in the hope that they will be released from their debts once the process is completed. It is important to note, however, that certain types of debt cannot be discharged through bankruptcy, such as student loans, child or spousal support, and some taxes. If the majority of your debts fall under these categories, Chapter 13 may be a good option, as it will allow you to get control over your debts and make manageable monthly payments.
  • Am I willing to risk some of my assets? Chapter 7 repays creditors by liquefying certain nonexempt assets, and if you do not want to risk losing any of your possessions this may not be the best option. Chapter 13 allows you to go through the bankruptcy process while retaining all of your assets.
  • Am I truly comfortable with filing? No matter the specifics of your unique circumstances, if you still do not want to file for bankruptcy, it may be best wait to file. Call our firm to explore which bankruptcy alternatives are available to you.

Enlist Skilled and Caring Guidance

Dealing with insurmountable debt is overwhelming and confusing, but with the assistance of a proven bankruptcy team you can be confident your rights and interests will be protected. Our team at the Law Offices is dedicated to providing the community with exceptional legal counsel to help them overcome their debts and take back control of their finances. With more than 100 years of combined experience, you can trust that our firm possesses the legal knowledge needed to help you find a beneficial solution for your family’s situation. We understand that this is a difficult time, which is why we are committed to providing our clients with the attentive and caring representation they deserve. Contact our firm today to learn how you can take the first step toward financial freedom!