General Bankruptcy Info

If you are overwhelmed with debt and struggling to keep up with payments, you may be contemplating bankruptcy.  But you may be asking yourself, “should I file for bankruptcy?”, “do I qualify for bankruptcy?”, or “which type of bankruptcy is right for my situation?”

Types of Bankruptcy

First, there are several different types of bankruptcy, known as “chapters.” A Dallas bankruptcy attorney will advise you on the best type for your situation.

Chapter 7

Chapter 7 is intended to remove your legal liability for certain debts (known as “discharging the debt”). It’s best for individuals and businesses who have no means of meeting their current debt obligations.

To qualify for Chapter 7 bankruptcy, you’ll need to pass a means test, which will determine if you are entitled for debt forgiveness through Chapter 7. If your debt is primarily business debt, you are not required to pass a means test.

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Chapter 13

Unlike Chapter 7, Chapter 13 bankruptcy allows you to restructure your current debts while giving you a time period to catch up on your payments. It’s possible to keep personal assets under Chapter 13 that would be forfeited otherwise.

Only individuals can file for Chapter 13 bankruptcy. Corporations that exist as their own legal entity cannot file Chapter 13. In addition, if your debts exceed a certain amount, you won’t qualify.

Chapter 11

The most flexible type of bankruptcy is Chapter 11. It allows corporations to restructure their debt, and it can also help those who don’t meet the requirements for Chapter 13. That said, it’s also highly complex, which means skilled legal help is an absolute necessity here.

How to Decide if You Should File for Bankruptcy

Bankruptcy is generally best used as a last resort. Even so, it may be right for your situation, so you’ll need to consider the following factors.

Other available options

If you have any options other than filing for bankruptcy, such as paying off debts yourself or rearranging the terms of the debt with your lender, you should do so.

Bankruptcy Eligibility

Chapter 7 and Chapter 13 both have eligibility requirements you’ll need to meet.

The requirements for Chapter 7 are as follows:

  • Pass a means test.
  • It must be at least eight years since you last filed Chapter 7.
  • It must be at least six years since you last filed Chapter 13 or 11, or you have paid off 70% of your unsecured debt.

Chapter 13 has these requirements:

  • No more than $419,275 in unsecured debt and $1,257,850 in secured debt.
  • Be an individual, not a corporation.

Type of debt

Some types of debt may not be discharged through bankruptcy, including:

  • Most taxes
  • Most student loans
  • Debts resulting from fraud or theft
  • Spousal or child support
  • Certain personal injury damages
  • DWI penalties

Process of Filing for Bankruptcy – Contact a Dallas Bankruptcy Attorney

If you’re a Texas resident in the DFW area, the process of filing bankruptcy begins with contacting a Dallas bankruptcy lawyer. From there, you’ll follow these steps:

  • Take a one-hour credit counseling course.
  • File a petition with the bankruptcy court, who will issue an automatic stay and assign a trustee.
  • Create bankruptcy schedules (to report debts) and a repayment plan (for Chapter 13 or 11).
  • Take a two-hour financial management course.
  • Meet with creditors at a 341 meeting within 60 days.
  • Make payments (for Chapter 13 or 11) over three to five years.

After that point, you should receive a discharge, giving you a fresh financial start and a brighter future.  If it’s time to consider bankruptcy, contact the Law Offices of Bill F. Payne, P.C. today for a consultation.