What are the main purposes of bankruptcy for individuals who cannot pay their debts?
What is a Chapter 7 and how does it work?
Who can file for bankruptcy?
How much does it cost to file a chapter 7 bankruptcy?
How often can I file bankruptcy?
Where will my bankruptcy be filed?
Can husband and wife file a joint bankruptcy petition?
Are all debts incurred prior to filing bankruptcy discharged in Chapter 7?
Do I have to go to court?
Who is the bankruptcy trustee?
What are my responsibilities to the trustee?
Do all creditors have to be listed on bankruptcy schedules?
What should a debtor do if a creditor does demand payment of a debt that is listed in the bankruptcy?
If creditors persist in contacting you once you have notified them that you have filed bankruptcy, you should keep a record of the time and content of the communication and discuss this with your attorney immediately. There may be substantial sanctions imposed upon the creditor for violation of law.
Does a bankruptcy automatically remove liens, such as Mortgages against a debtor’s property?
How do I know when my bankruptcy case is completed and I am no longer in bankruptcy?
How does bankruptcy affect my credit rating?
What happens if my case contains non-exempt assets?
What are exempt assets?
- Homestead, subject to purchase money, improvements, tax lien and consisting of a) Not more than ten urban acres: or b) Not more than 100 rural acres (200 acres for a family). c) Not more than $125,000.00 in equity that was acquired within 1215 days prior to the filing of bankruptcy.
- Personal Property: a) Without limit 1) All current wages 2) IRA’s and most retirement plans. 3) Prescribed health aids b) The following not to exceed $30,000.00 ($60,000.00 for a family) 1) Unpaid commission of $7,500.00 for a single person/$15,000.00 for a family. 2) Home furnishings. 3) Provisions for consumption. 4) Tools of the trade including boats and motor vehicles. 5) Clothing. 6) Jewelry up to $7,500.00 ($15,000.00 for a family). 7) Two firearms. 8) Athletic and Sporting equipment (including bicycles). 9) Motor vehicles, one for each licensed driver and person who must rely on a licensed driver for transportation. 10) Certain livestock. 11) Household pets. 12) Present value of any Life Insurance Policy.
- Unlimited insurance benefits and cash value
- Proceeds to be paid under compensation laws including unemployment, workers compensation and crime victim benefit.
- Texas Tomorrow Fund
Note: Personal property may not be converted from non-exempt to exempt in an effort to defraud creditors. Federal Exemptions (per debtor)
- $21,625 in value for real or personal property used as a residence
- Up to $3,450 in equity in any one motor vehicle
- Up to $550 in value in any particular item of household furnishings, or wearing apparel, up to a total of $11,525
- Up to $1,450 in jewelry held for personal use
- Up to $2,175 in tools of the trade
- Any unmatured life insurance contract you own, except for a credit life insurance contract
- The right to received certain support and disability payments
- Any property not otherwise protected in an amount not to exceed $1,150 plus any unused amount of the $11,975 (1) above
How will the court contact me about orders that I am to follow?
What should I do if I move or change addresses?
Do I lose any of my rights, such as the right to vote by filling bankruptcy?
Will news of my bankruptcy be published?
Are my out-of-state debts discharged in the bankruptcy?
Will I lose all of my property if I file bankruptcy?
What, if any, debts should I pay prior to filing a Chapter 7 bankruptcy?
Pay car loans or leases next if you really need your car. You will usually make your car loan or lease payments next after food, housing costs, medical expenses, utilities and clothing. You may even want to pay for the car first if the car is essential to holding onto your job. If you do keep the car, stay current on your insurance payments too. Otherwise the creditor may buy at your expense, even more costly insurance that gives you much less protection. In Texas it is illegal not to have automobile liability coverage. If you can do without your car or one of your cars, you not only save on car payments, but also on gasoline, repairs, insurance and the like. You must pay your child support debts.
Income tax debts are a high priority. You must pay your current year’s income taxes that are not automatically deducted from your wages. You must also file your tax returns timely, even if you cannot afford to pay any balance due. If you are unable to pay required income tax obligations, you may consider filing a chapter 13 bankruptcy. In a chapter 13, interest and penalty cannot accrue during the repayment time. Loans without collateral are a very low priority. Most credit card debts, attorney, doctor and hospital bills, and other debts to professionals, open accounts with merchants, and similar debts are a low priority. Loans with only household goods as collateral are a very low priority. Sometimes a creditor requires you to put up some of your household goods up as collateral on a loan. You should generally treat this loan the same as an unsecured debt, that is, as a low priority. Creditors rarely seize household goods because they have little market value, it is hard to seize them without court process, and it is time consuming and expensive to use a court process to seize them. Do not move a debt up in priority because the Creditor threatens to sue. Many threats to sue are not carried out. Even if the creditor does sue, it will take a while for the collector to be able to reach your property, and much of your property may be exempt from seizure. Additionally, many debt collectors violate federal law in the manner by which they attempt to collect this obligation. If a violation occurs, you may be entitled to receive damages from the debt collector. If you believe a violation has occurred, talk to one of our attorneys about possible alternatives. Do not pay when you gave good legal defenses to repayment. Some examples of legal defenses are that goods purchased were defective, or that the creditor is asking for more money than it is entitled to. If you have a legal defense, you should obtain legal advice to determine whether your defense will succeed. In evaluating these options, remember that it is especially dangerous to withhold mortgage or rent payments without legal advice.
Court Judgments against you move up in priority, but often less than you think. After a collector obtains a court judgment, that debt often should move up in priority, because the
creditor can enforce that judgment by asking the court to seize certain of your property, wages, and back accounts. Nevertheless, how serious a threat this really is will depend, according to Texas law, on the value of your property and your income. It may be that all your property and wages are protected under state law, and you should pay this debt only after more pressing obligations. Student loans are a medium priority debt. Student loans should generally be paid ahead of low priority debts, but after top priority debts. Most delinquent student loans are backed by the United States and federal law provides special collection remedies against you, which other creditors do not, such as seizure of your tax refund and denying you new student loans and grants.
Debt collection efforts should never move up a debts priority. Be polite to the collector, but make your own choices about which debts to pay based on what is best for your family. Debt collectors are unlikely to give you good advice. Debtor collectors may be most aggressive to get you to pay debts that you should actually pay last. You can stop debt collection contacts and have legal remedies to deal with collection harassment. Threats to ruin your credit record should never move up a debt’s priority. In many cases, when a collector threatens to report your delinquency to a bureau, the creditor has already provided the credit bureau with the exact status of the account. And if the creditor has not done so, a collector hired by the creditor is very unlikely to do so. In fact, your mortgage lender, your car creditor, and other big creditors are much more likely to report your delinquency (without any threats) than is a debt collector that threatens you about your credit. Refinancing is rarely the answer.
You should always be careful about refinancing. It can be very expensive and it can give creditors more opportunities to seize your important assets. A short-term fix can lead to long-term problems.