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).
The first fact we look at to determine if you are eligible for a Chapter 7 bankruptcy in Houston is where you live. Houston is in the “Southern District of Texas” which includes the following counties: Austin, Brazos, Colorado, Fayette, Fort Bend, Grimes, Harris, Madison, Montgomery, San Jacinto, Walker, Waller and Wharton. If you live in Brazoria, Chambers, Galveston or Matagorda County you may also elect to file your bankruptcy in Houston.
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.
You’ll be scheduled for a hearing, which you may hear described as a “341 meeting” or a “creditors’ meeting.” This meeting usually takes about 5 minutes. The bankruptcy trustee will ask some questions to make sure all of your information is accurate and that you understand how bankruptcy works. You’ll provide identification. In most cases, that’s all there is to it.
Your creditors have the right to show up and ask questions, but that almost never happens–especially if there are no assets available to pay creditors.
Then, you wait. While you’re waiting, you take another course, called the “financial management course” or “debtor education.” This course is also inexpensive and easily available from home. If the bankruptcy trustee doesn’t need any additional information and no creditors object, you may receive your discharge as soon as 3.5 months after filing.
Most Chapter 7 bankruptcy filers never go to court.
Chapter 7 bankruptcy can wipe out debts such as:
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.
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.
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.