For many people who live in Fort Worth, debt can serve as a major hindrance to accomplishing their goals. If this applies to you, the good news is you have options for moving past your debt and getting your life back on track. One of those options is bankruptcy.
Do you have questions about the bankruptcy process? Are you unsure whether it’s a good choice for your circumstances? Reach out to Toronjo & Prosser Law today. Our bankruptcy attorneys can review your debt situation and help you file for bankruptcy.
Who Should Consider Bankruptcy In Fort Worth, Texas?
For most people, even those in debt, bankruptcy is a topic they would rather not even think about. Despite the negative connotations associated with the word, bankruptcy is a rather common process that has helped countless debtors. People from every walk of life have used bankruptcy to clear debt they could not otherwise handle.
You may have at one time enjoyed financial security, but then the economy took a downturn. Or maybe a client has failed to make agreed-upon payments to your business. You may have even lost your job and now you can’t keep up with your credit card payments. The fact is, anyone can find themselves struggling to keep up with debts.
For many debtors, bankruptcy offers a chance at a fresh start. Most debtors can even keep all or at least the majority of their property after a bankruptcy. For every misconception about bankruptcy, there’s a good reason that someone has chosen it. That’s why it’s critical to talk with a bankruptcy attorney if you’re having financial difficulties.
Bankruptcy is not a decision to take lightly, and our job is not to rush anyone into it. There are benefits and drawbacks to consider. Every person’s debt situation has to be evaluated on its own, individual facts. Our aim is to help people and businesses learn how bankruptcy works and how it might affect their credit and financial future. We also explore alternatives to bankruptcy with every client we retain. That’s the level of personalized attention and diligence you can expect from Toronjo & Prosser Law.
What Is Chapter 7 Bankruptcy?
Both individuals and businesses struggling with debt can file for Chapter 7 bankruptcy. Under Chapter 7, also known as a liquidation bankruptcy, a trustee is assigned to your case. The trustee’s job is to sell off as many non-exempt (i.e. unprotected) assets as possible to pay down your debt. This type of bankruptcy is an appealing choice for debtors with unsecured debts such as:
- Credit card bills
- Medical bills
- Utility bills (electric, water, etc.)
- Unsecured court judgments
- Collection agency debts
- Personal loans
Not all of your property has to be sold in a Chapter 7 liquidation, due to what are known as exemptions. Certain assets are legally shielded from the bankruptcy process. For instance, small items with little market value like appliances, furniture, and clothing are typically exempt. Your home and vehicle up to certain limits may also be exempt.
But not everyone can qualify for Chapter 7 bankruptcy. Your household income must be lower than the median income in Texas. If it’s higher, you have to pass a means test that considers your disposal income and debt.
An individual debtor who files for Chapter 7 can have certain debts discharged. This option is not available to businesses, however. A business that files for Chapter 7 bankruptcy will ultimately be closed, and any remaining assets will be sold to pay off debts.
What Is Chapter 13 Bankruptcy?
If you don’t qualify for Chapter 7, you might be able to file for Chapter 13 bankruptcy. This type of bankruptcy is available to individuals, not businesses. It is known as a reorganization bankruptcy because the objective is to reorganize and pay debts rather than going through the potential liquidation process of a Chapter 7.
The advantage is that the Chapter 13 filer will usually be able to keep his or her property rather than having to sell it off as with Chapter 7. To do so, the debtor must propose a 3-5 year repayment plan for the debts. As long as the debtor sticks with the plan and makes the required payments, the bankruptcy can be discharged and the property can be kept.
However, the bankruptcy trustee, creditors, and judge must review and approve the proposed reorganization and payment plan. Any missed payments might allow creditors to resume collection efforts. It’s important for the Chapter 13 filer to be sure he or she can stick to the plan before submitting it to court, and that’s where having an attorney will prove invaluable.
What Is The Automatic Stay In A Fort Worth Bankruptcy?
Both Chapter 7 and Chapter 13 bankruptcies trigger what is known as the automatic stay. This is a court order that bars creditors from collecting on your debts. The automatic stay prevents:
The automatic stay allows much-needed breathing room so debtors can focus on handling their debts and working through bankruptcy. Creditors can ask the court to lift the stay in some circumstances, but there are penalties if they violate the stay while it’s in effect.
Contact Our Fort Worth Bankruptcy Attorney Today
When you retain our law firm, we will review your debt and explain how factors like your income will affect the bankruptcy process. One key part of this is to consider what your goals are. For instance, if your aim is to keep as much property as possible, Chapter 13 could be the best choice. If the goal is to finish the bankruptcy quickly, Chapter 7 might work instead.
We can also contest creditor motions to lift the automatic stay and take legal action if the stay is violated. Finally, our team will discuss alternatives to bankruptcy that may work better in your case.
If you’re ready to put your debts behind you, call Toronjo & Prosser Law to schedule your confidential consultation today.