Click the questions below for answers to commonly asked bankruptcy questions. If you have other questions not covered here, contact us for answers or for a free consultation.
Bankruptcy is a federal legal proceeding that provides debtors with a form of relief. Chapter 7 bankruptcy, also know as “straight bankruptcy” or a “liquidation,” is generally appropriate for debtors with a large amount of unsecured debt (like credit cards or medical bills). Chapter 7 bankruptcy involves discharging or eliminating all debt and turning over all property that is not “exempt.” Chapter 13 is usually appropriate for debtors who have a regular income that have fallen behind on mortgage or auto payments and involves working out a plan to make reduced payments over a three or five year period. Determining whether Chapter 7 or Chapter 13 is best for you requires an evaluation of your income, assets and debts and is best done with the assistance of a bankruptcy attorney.
You can keep certain exempt assets when filing bankruptcy. You may elect to use the federal statutory exemptions or the state exemptions, but in Texas, the state exemptions are typically more generous. If you elect the Texas exemptions, with some limitations, you can keep the following items:
- Your home (if you own it outright) as long as it is located on not more than 10 acres in the city and not more than 200 acres in the country
- A motor vehicle for each person that holds a license
- Home furnishings
- Two firearms
- A limited amount of livestock
- Retirement plans like 401(k)’s and IRA’s
These items cannot usually be discharged or eliminated in a Chapter 7 bankruptcy:
- Taxes for a tax period less than three years old
- Debts incurred by false statements when the credit was obtained
- Purchases incurred or debts incurred in contemplation of bankruptcy (debts incurred with no intent of paying the creditor)
- Debts owed to a single creditor for more than $550 for luxury goods or services, including cash advances purchased within 90 days before filing
- Purchases of non-luxury items aggregating more than $825 on or within 70 days before filing
- Debts for alimony or child support or debts resulting from a marital property division
- Student loans (unless a showing of undue hardship can be made)
- Debts arising from a judgement where liability was incurred due to the debtor’s operation of a motor vehicle while intoxicated
This list is not exhaustive. Speak to an attorney if you have questions about whether a debt can be discharged.
Yes, but you must continue to make timely payments. If you are behind on payments in a Chapter 7 bankruptcy, you may have a limited amount of time to catch up those debts after your bankruptcy filing. If you are unable to get those debts current and have a consistent source of income, Chapter 13 bankruptcy might be a better option.
Your co-signer remains liable for the debt. If timely payments are made in the course of a Chapter 7 or if full payment is proposed in a Chapter 13 plan, your bankruptcy is unlikely to affect the co-debtor’s credit.
Bankruptcy remains in your credit file for 10 years after filing. The likelihood of you getting credit in the future is usually determined by your income, your bills or obligations and the amount of time that has expired since you filed bankruptcy. Depending on your how damaged your credit was before bankruptcy, lenders may consider you less of a credit risk after your bankruptcy. One thing to note is that you cannot take on additional credit without court approval during the time of your Chapter 13 repayment plan.
Your initial consultation with the Cottrell Law Firm is free. We can help you determine if bankruptcy is right for you and what type of bankruptcy benefits you most. If you choose to file bankruptcy, the filing fees charged by the court in the Eastern District of Texas are $335 for Chapter 7 and $310 for Chapter 13. These fees must be paid when your case is filed unless the court waives the fees in a Chapter 7, you opt for our zero down Chapter 7 filing or the court allows you to pay them in installments in the case of Chapter 13.
Our fees for Chapter 7 bankruptcy vary depending on the complexity of your case, and we give you the option of paying all, part or none of the fees up front. If you have a bank account and a consistent source of income you can get debt relief now, and pay for your bankruptcy for up to 12 months. So far as we are aware, we are the only firm in East Texas offering Chapter 7 bankruptcies with zero money down. Chapter 13 bankruptcy is more expensive, but only a small portion of our Chapter 13 fees must be paid before filing. The remaining fees are paid monthly to the Trustee over the course of your repayment plan. Any fee we charge must be disclosed in the bankruptcy filings and approved by the court.
In addition to these fees, you must complete a “credit counseling” course before your bankruptcy may be filed. This counseling is done over the internet or by telephone and typically costs around $25.
If you decide to file for bankruptcy, we will give you a questionnaire and checklist to be filled out so we can complete the forms to file your case. You will be given an opportunity to review the petition and other documents before these are filed. Contact us for a free consultation or more information.