Chapter 7 Bankruptcy
This form of bankruptcy is also called liquidation bankruptcy. As the name entails, you will liquidate your assets that aren’t exempt by selling them and using that money to eliminate your debt. Those who utilize Chapter 7 Bankruptcy must pass the “means test,” which looks at your income to determine whether or not this is the best kind of bankruptcy for you. If your income is below the median for Texas residents, then you’re eligible to have your assets liquidated.
From the moment you file for Chapter 7 Bankruptcy to the date of debt discharge, you’ll be looking at approximately four months. However, everyone’s situation is different so you should speak with a knowledgeable Houston attorney for an estimation on your bankruptcy timeline.
Chapter 13 Bankruptcy
Those who don’t qualify for liquidation will usually then think about Chapter 13 Bankruptcy. Also known as reorganization bankruptcy, this form uses a different technique than selling off assets to eliminate debt. Instead, all of your debts, including medical and credit card debts, are all reorganized into one, easy-to-keep-track-of payment.
Because your income is above the state median, then you will likely have enough disposable money, however small, to put toward this monthly payment. It may not seem like you’re eliminating your debts since you’re not paying them off all at once, but you’ll find it’s a lot easier to keep track of payments when it’s all consolidated into one.
Unlike liquidation, reorganization takes a little bit longer since you’re not paying your debts all off at once with the money from selling your property. First, it will take approximately three months from the day you file your petition for bankruptcy to be approved to create a payment plan. After that, you will slowly pay off your debts each month for three to five years, depending on your income, amount of debt, among other factors.
You Need a Bankruptcy Attorney Who Cares
Throughout your life, you may hire an attorney with good faith but end up finding out they treat each of their clients as a number and not like a human being going through very human experiences. I differ from other attorneys because I truly care about the well being of my clients and their families.
Don't stay buried under your debt. Get the help you need to find a more secure future. I represent clients in bankruptcy matters in the greater Houston, Texas area, as well as The Woodlands and Conroe.