Chapter 7 Bankruptcy: Understanding the Basics

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					CHAPTER 7 BANKRUPTCY


 Understanding the Basics
1             Bankruptcy Protection




 If you are facing foreclosure, your paycheck is being
 garnished, or you feel like you are drowning in bills,
IT MAY BE TIME TO CONSIDER BANKRUPTCY
A chapter 7 bankruptcy can provide
  you with a fresh start while still
  protecting your home and your
  important assets in most cases.
2               US Bankruptcy Code




Bankruptcy protection is found in the U.S. Bankruptcy
Code, meaning that the federal courts have jurisdiction
           over bankruptcy proceedings
An individual may file bankruptcy
  under chapter 7, 11, 12 or 13
    of U.S. Bankruptcy Code.
Chapter 11 -- Typically used by small businesses
Chapter 12 – Family farmers or fishermen
     Chapter 13 – Wage earner plan




Used by debtors with
significant income
and/or valuable non-
exempt assets
Chapter 7 – Quickest way to a fresh start




Simplest and fastest chapter, it is the
most popular option for individuals
3         Chapter 7 Specifics



  The vast majority of debtors who
   file chapter 7 are able to retain
their assets due to strong exemption
  laws under state and federal law
     ALMOST ALL DEBTS ARE DISCHARG
       in a Chapter 7 Bankruptcy
That means that creditors are forbidden
 from trying to collect those debts from
    people who have filed Chapter 7
Other chapters require debtor to
repay debts over time
4   The Means Test




Debtor must pass means test
    TO FILE CHAPTER 7
Compares your income
to other Texas residents
   If your income is over the
      median for your area
it becomes more complicated
      THE MEANS TEST
 is a very complicated form.
  You need an experienced
bankruptcy attorney to assist
       you complete it.
5   Chapter 7 Process
Debtor completes credit counseling
       course prior to filing



                               a
Petition and bankruptcy schedules
    filed with bankruptcy court



                              b
The filing of the case creates an injunction
  against all creditor collection activities.
       No court order is necessary…
 The filing of the case is all that it takes to
          stop creditor collection.



                                            c
The trustee is automatically appointed. The
 trustee reviews the bankruptcy filings to
make sure they are correct and all assets are
       properly claimed as exempt.



                                         d
    Meeting of creditors is held
20-40 days after filing at a conference
      room at the court house.
        No judge is present.



                                    e
Creditors may ask about your
   INCOME AND DEBTS
However, usually no creditors
 show up to the meeting of
   creditors in Chapter 7
     bankruptcy cases.
 Debtor must complete a debtor
education course – either online
    or by watching a DVD.


                              f
Debtor is discharged from
   virtually all debts.




                            g
 6               Exemptions




The U.S. Bankruptcy Code includes exemptions that a
   debtor may be entitled to use. Additionally, the
    individual states may also create exemptions.
Texas allows a debtor to choose
between state and federal exemptions
   7
              Keeping Your Home,
              Vehicle and Possessions




Texas has very pro-debtor exemptions that allow most
debtors to retain their homes, vehicles, and personal
possessions
Unlimited homestead exemption –
up to 10 acres in a city and up to 100 acres
    in the country (200 acres if family)
Pets and livestock up to $30,000
  ($60,000 for head of household)
One vehicle per family member
Home furnishings, food, clothing, family
 heirlooms, jewelry and two firearms
        up to $30,000 in value
        ($60,000 for families)
Pensions and social security payments
         are totally exempt.
   IRA’s and Retirement accounts
    are exempt up to $1 million.
Tools of the trade and farming
equipments are exempt as well.
Life Insurance is also exempt.
8   Debts That Cannot Be
    Discharged
Certain types of tax debts


Spousal and child support


Student loans


Debts for personal injury caused by driving
under the influence of drugs or alcohol
8        Credit Post-Bankruptcy




   Worrying about your credit after bankruptcy is
understandable; however, for most debtors their credit
 improves significantly after a Chapter 7 bankruptcy.
Debt to income ratio improves the
   day the bankruptcy is filed.
  You cannot file a Chapter 7
Bankruptcy case for at least eight
             years
 Many debtors can secure car loan
 during the Chapter 7 or after the
discharge if they have employment
        or steady income.
Obtaining a mortgage loan may take
closer to two years post-bankruptcy
  Want to Know More About
Chapter 7 Bankruptcy in Texas?
 Get Your Bankruptcy Questions Answered




Click to visit: centraltexasbankruptcy.com
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