Personal Chapter 7 Bankruptcy
What is a personal Chapter 7 bankruptcy ?
Chapter 7 bankruptcy is commonly called liquidation. Despite this name, most families or individuals who file Chapter 7 with us do not have to give up any of their possessions as a part of the process. Upon successful completion of a Chapter 7, you receive a discharge of most unsecured debts (the debts are “wiped out”). There are exceptions that can be discussed during a consultation (some examples are listed below). A personal Chapter 7 bankruptcy means that you (or you and your spouse) are filing Chapter 7 bankruptcy (as compared to a Corporation or LLC filing bankruptcy).
Do I qualify for a personal Chapter 7 bankruptcy?
That depends. The first fact we look at to determine if you are eligible for a Chapter 7 bankruptcy. The second factor we look at is your household income. We compare your household income to the ‘median income’ for Texas. The median income in Texas ranges from $42,223 for a household of one to $70,824 for a household of 4. Even if you are above the median income you may have other facts that make you eligible to file a Chapter 7 bankruptcy. As one example, if more than half of your total debts are a direct result of a failed business, you may qualify for a Chapter 7 bankruptcy regardless of your current household income. Even if you qualify for a Chapter 7 bankruptcy, there may be reasons based on your specific facts that would make filing a Chapter 13 bankruptcy the right solution for you. Whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for you will be discussed during a consultation.
Why do I need a bankruptcy attorney to file a personal Chapter 7 bankruptcy?
While it is possible for a person that is a not a lawyer to file their own bankruptcy, the bankruptcy process is filled with many potential pitfalls. Filling out the paperwork incorrectly or missing a deadline can result in a variety of consequences, including not being granted a discharge (the paper that the judge signs that wipes out certain debts). Hiring an experienced Houston bankruptcy attorney will help you avoid those pitfalls.
Can I leave a creditor out of my personal Chapter 7 bankruptcy?
No. When you file Chapter 7 bankruptcy you are required to list all creditors. A creditor is anyone you owe money to or who might say you owe them money. You will sign papers stating that you have listed all creditors to the best of your knowledge, including credit card companies, hospitals, doctors, student loan companies, the IRS, mortgage companies, friends, family members, etc.
Can I omit an asset from my personal Chapter 7 bankruptcy?
No. When you file Chapter 7 bankruptcy you are required to list all of your assets. An asset is anything you own or have an interest in (cars, homes, cash, bank accounts, furniture, etc.). Intentionally omitting an asset can land you in very hot water. This even means listing things you own that may be titled in someone else’s name. For example, a car that is yours but has a title in another person’s name or a home that was inherited and is still in the deceased’s name would both need to be listed as assets.
What types of debt can a personal Chapter 7 bankruptcy help with?
Chapter 7 bankruptcy can wipe out debts such as:
auto loan repossession deficiencies
some types of IRS debt
What types of debt does personal Chapter 7 bankruptcy not help with?
Chapter 7 bankruptcy will NOT wipe out debts such as:
student loans (of any kind)
some types of IRS debt
debts that are considered obtained through fraud
If I file a personal Chapter 7 bankruptcy will I have to give up my possessions?
Most people that file Chapter 7 bankruptcy with our firm do not have to give anything up. There are rules in Chapter 7 bankruptcy called “exemptions.” If you have lived in Texas for at least the last two years, you have the option to use either the “Texas exemptions” or the “federal exemptions.” These rules are a list of the property you may keep when filing a Chapter 7 bankruptcy. The Texas exemptions protect your homestead (regardless of your equity in the home, with a few exceptions), furniture, clothing, retirement funds and more. The federal exemptions are typically more suited for someone with less than about $22,000 ($45,000 for a joint filing) equity in their home. The federal exemptions allow for a ‘wild card’ that can be used to protect property that does not fall under any other exemption categories. After a free consultation with a Houston bankruptcy attorney you will be advised of any possessions that you may have to give up as a part of your Chapter 7 bankruptcy.
What is the personal Chapter 7 bankruptcy process like?
Once your Chapter 7 bankruptcy is filed (bankruptcy filings are done from our office), you will attend a ‘meeting of creditors’ about four weeks later. Creditors rarely attend this meeting. A typical meeting is attended by you, your lawyer, and the Chapter 7 Trustee (a lawyer appointed by the court to oversee your Chapter 7 bankruptcy). The meeting is held in a conference room and usually lasts less than 5 minutes. Most Chapter 7 bankruptcy cases in Houston are concluded 60-75 days after the ‘meeting of creditors.’
Is this all I need to know to file a personal Chapter 7 bankruptcy ?
Not at all. Chapter 7 bankruptcy is very complex. Only after a consultation with a bankruptcy attorney will the attorney be able to tell you how your facts apply to Chapter 7 bankruptcy law.