Have you found yourself unable to keep up with your credit card bills, car loans, mortgage, or other debts? Filing for bankruptcy can provide the financial relief you need to begin on the path toward a brighter future. Contact Toronjo & Prosser Law today for a free initial case review to learn more about Chapter 7 bankruptcy in Fort Worth and discuss whether filing for Chapter 7 represents the best solution for your debt troubles.
Why Choose a Bankruptcy Attorney from Toronjo & Prosser Law?
Filing for bankruptcy involves a complex, time-consuming process. Choosing the right legal counsel can make debt recovery less stressful and give you a better path toward financial relief. For years, clients have turned to Toronjo & Prosser Law for help with the Chapter 7 process because:
- Our small firm approach allows us to provide the personal attention you deserve so you never feel like just another client or case number.
- You will always meet with an attorney to discuss your case; we never pass clients off to paralegals or legal assistants.
- Our attorneys have handled thousands of bankruptcy cases and have become well-versed in bankruptcy law.
- We offer free consultations at our office right off Highway 75 in Dallas.
Understanding Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also called “liquidation bankruptcy,” can relieve debtors who cannot afford to service their debts from most financial liabilities. In Chapter 7, debtors, through a bankruptcy trustee, sell their non-exempt property to generate cash, which they can use to pay their creditors per the provisions of the Bankruptcy Code. Debtors can keep a limited amount of their property as exempt from liquidation. When a debtor has remaining debts after liquidating their non-exempt assets and distributing the proceeds to creditors, the bankruptcy court may grant the debtor a discharge from those remaining debts, meaning the debtor has no further obligation to repay the creditor.
Filing for bankruptcy can also afford immediate relief from debt collection activities like foreclosure through the automatic stay. Once a person files for bankruptcy, their creditors cannot start or continue debt collection activities, including sending debt collection letters, seizing property, or pursuing court actions, unless a creditor obtains relief from the automatic stay from the bankruptcy court.
A person must meet the “means test” to qualify to file for Chapter 7 bankruptcy. The means test checks whether an individual has disposable income to make payments toward their debts and ensures that creditors will receive at least as much payment in Chapter 7 as they would under other types of bankruptcy.
Chapter 7 Bankruptcy Exemptions in Fort Worth
Debtors who file for Chapter 7 bankruptcy can exclude various assets from the liquidation process, allowing them to keep those assets after bankruptcy. Debtors may rely on the federal Chapter 7 exemption list or the exemption list under Texas law. Under Texas law, a person may rely on the state’s homestead exemption to exempt their primary residence from Chapter 7 liquidation, with acreage limits for residents limited to 10 acres for urban homes or 200 acres for rural homes. Personal property that a person may exempt in a Chapter 7 case includes:
- Personal property, such as motor vehicles, home furnishings, clothing, farming and ranching equipment, tools of the trade, up to two firearms, athletic and sporting equipment, pets and domestic animals, and limited numbers of livestock, up to a total aggregate value of $50,000 for an individual or $100,000 for a family
- Currently-earned wages, except for court-ordered support
- Health aids and medical equipment, such as hearing aids, canes, walkers, CPAP machines, or wheelchairs
- Books containing sacred religious writings
- Burial plots
Other property exempted by Texas law includes:
- Qualified retirement plans
- Pension and retirement plans for state, county, and municipal employees
- Fraternal society (e.g., Freemasons, Knights of Columbus, Elks) benefits
- Life, health, or disability insurance or annuity benefits
- Texas state employee group life insurance benefits
- College savings plans
- Crime victim’s awards
- Public assistance benefits
- Unemployment benefits
- Workers’ compensation benefits
Chapter 7 debtors can also exempt most tax-exempt pension and retirement accounts, such as 401(K)s, 403(b)s, and SEP, SIMPLE, and Roth IRAs, up to a maximum account balance cap, regardless of whether a debtor chooses the federal or Texas exemption list.
Chapter 7 exemptions under federal law include:
- Up to $27,900 in equity in a primary residence
- Up to $4,400 in equity in a motor vehicle
- Up to $1,875 in jewelry
- Up to $700 per individual item, $14,875 in aggregate value in household goods, furnishings, appliances, clothes, books, and other personal items
- Up to $2,800 in tools of the trade
- Health aids and other medical devices
- Up to $14,875 in loan value, accrued dividends, or life insurance policy interests
- Spousal or child support payments
- Life insurance payments
- Social Security, unemployment, workers’ compensation, veteran’s, or public assistance benefits
- Crime victim compensation
Federal law also provides a “wildcard” exemption allowing debtors to exempt up to $1,475 plus $13,950 of any unused portion of the homestead exemption to exempt any property not otherwise exempted under the federal list.
Pros and Cons of Chapter 7 Bankruptcy
Filing for Chapter 7 bankruptcy has various benefits and drawbacks compared to other forms of bankruptcy or debt resolution strategies. Some of the pros of Chapter 7 include:
- Quicker Resolution of Debts – Most debtors complete a Chapter 7 case within several months, whereas other types of bankruptcy cases can take years.
- Faster Start Toward Financial Recovery – Wiping out debts through liquidation and discharge can allow debtors to begin working toward financial recovery more quickly.
- Peace of Mind – A more efficient resolution to debt problems can give a debtor peace of mind compared to continuing to have debts hanging over their head.
Cons of Chapter 7 bankruptcy compared to other forms of bankruptcy or debt resolution strategies include:
- Harsher Impact on Credit Scores – Chapter 7 can have a more drastic negative effect on credit scores and stay on credit reports longer than other forms of bankruptcy.
- Loss of Property – Chapter 7 requires debtors to sell their non-exempt property, whereas other types of bankruptcy, like Chapter 13, allow debtors to keep their property (in exchange for repaying debt over time).
- Stricter Eligibility Requirements – Not everyone will satisfy the means test to qualify to file for Chapter 7.
Contact Our Firm Today to Learn About Filing for Chapter 7 Bankruptcy in Fort Worth, TX
When you can no longer afford to pay your debts, filing for Chapter 7 bankruptcy may give you the best chance to obtain a fresh start toward financial health. An experienced bankruptcy attorney from Toronjo & Prosser Law can explain the pros and cons of Chapter 7 and its suitability for your situation. Contact our firm today for a free, confidential consultation to discuss your legal options.