Bankruptcy Laws

Houston bankruptcy attorney Vicky Fealy has represented consumers and businesses for more than 18 years. Ms. Fealy is one of a limited number of attorneys that are Board Certified in Consumer Bankruptcy by the State Board of Legal Specialization in Houston and has devoted her legal career exclusively to bankruptcy law.

If you are facing a Foreclosure in Houston, or the adjoining areas, a Chapter 7 bankruptcy or IRS problems, creditor harassment, credit card debt, repossession, chapter 11 bankruptcy, liquidation, debt collection, or chapter 13 bankruptcy you need a Houston Consumer Bankruptcy lawyer. This is no time to choose a law firm who occasionally dabbles with Bankruptcy cases.

BANKRUPTCY LAW

• Bankruptcy provisions were established by the U.S. Constitution; therefore, all bankruptcies must follow the basic guidelines created by Congress and the U.S. Bankruptcy Courts.
• The Bankruptcy Code refers to Title 11 of the United States Code (11 U.S.C. 101-1330). This is the federal law that provides bankruptcy relief.

As a consumer, you can file for bankruptcy in Texas under either:

• Chapter 7 (Straight Bankruptcy) to wipe out most debts and get an immediate fresh start or
• Chapter 13 (Wage Earner Bankruptcy) to set up a repayment plan to pay back your debts over several years' time.

CHAPTER 7 BANKRUPTCY

• Chapter 7 is sometimes referred to as straight bankruptcy or liquidation. This is because (contingent on your specific situation and assets) a Chapter 7 discharges or "wipes out" all of your unsecured debt. Whether a debt is secured or unsecured can be confusing and should be discussed personally with your attorney.
• However; generally speaking, a debt is secured if it was incurred to buy specific collateral that the creditor retains an interest in and can repossess. Examples of secured debt include your house, vehicle, furniture and appliances. These debts are often reorganized in a Chapter 13.
• Chapter 7 discharges your debts that are not secured. Examples of unsecured debt include most credit card debt, personal loans, judgments and medical bills. Chapter 7 allows you to discharge your unsecured debts and keep all of your exempt assets such as houses, cars and retirement accounts. In a Chapter 7 your secured debt must continue to be paid or the collateral may be surrendered. Chapter 7 affords you the opportunity to make a clean start without the burden of bills.
• Those considering a Chapter 7 filing must qualify through a "means test" to determine if they have the means to pay their creditors. They must file a Statement of Financial Affairs listing their assets, debts, and names and addresses of all creditors. Anyone filing Chapter 7 must fall below the state's median income for families or otherwise qualify through “means testing”. In Texas, that median income ranges from $38,940 for a single person to $66,381 for a family of four. Anyone above the median must qualify for a Chapter 7 under strict guidelines. If a debtor does not qualify for a Chapter 7, he or she may still file Chapter 13, which establishes a debt payment program.
• The 2005 Bankruptcy Act requires Chapter 7 filers to attend a court-certified credit counseling class prior to filing and a personal finance management class after filing. In addition, the individual must attend a meeting of creditors, called a "341 hearing" after the code that established it.
• Texas allows Chapter 7 petitioners the option of choosing the federal exemptions or the state's exemptions . Exemptions are property and assets that may be protected from seizure to pay creditors. The state of Texas allows a generous homestead exemption. The Texas exemptions include 10 acres of property (in town) or 100 (rural), $30,000 in personal property (livestock to home furnishings) and health aids, among others. The exemptions are increased for married couples filing jointly. There are exceptions to the exemptions and each case varies. Therefore, it is important to consult an attorney to know which exemptions will apply to your particular circumstances. Federal exemptions are also available for Texas residents who file bankruptcy. Choosing the appropriate exemptions is a critical part of the bankruptcy process so it is advisable to contact an experienced bankruptcy attorney to aid you. The bankruptcy does not eliminate voluntary liens, such as mortgages, student loans, alimony and child support, or tax debt.
• Bankruptcy laws were created as a way for those people who have become overburdened by debt to get out from under and have a chance to start anew. In Texas, as in other states, an automatic stay is placed on all debts once the Chapter 7 petition has been filed. This means creditors cannot seek payment during the Chapter 7 process. If the court rules in favor of the petitioner, the debts are discharged forever.

CHAPTER 13 BANKRUPTCY

With the latest changes in bankruptcy law, more and more people are finding themselves ineligible for traditional Chapter 7 bankruptcy, or liquidation; as a result, the trend is toward more Chapter 13 bankruptcy filings. However, many people who qualified for Chapter 7 under the old law still qualify for Chapter 7, but may find it advantageous to file for Chapter 13 anyway.

By filing Chapter 13 bankruptcy, you are essentially entering into a repayment plan that permits you to repay all or a portion of your debts over a certain time period. Often, interest rates are lowered or eliminated all together.

Furthermore, filing Chapter 13 bankruptcy generally permits you to keep your assets, which does not always occur in a Chapter 7 bankruptcy. Therefore, if you are a person who has substantial assets, as well as a regular income sufficient to repay all or most of your debts, filing Chapter 13 bankruptcy may be the right step for you.

Much like a Chapter 7 bankruptcy filing, Chapter 13 bankruptcy proceedings start when you file a petition, along with various required forms regarding your assets, income, debts, and expenses. Filing Chapter 13 bankruptcy also requires the filing of a repayment plan at the time of or shortly after the petition is filed, for approval by the court. Within 30 days of filing Chapter 13 bankruptcy, you have to begin making payments to the trustee as per the terms of your plan.

Furthermore, a Chapter 13 bankruptcy filing will result in an “automatic stay”, or a temporary order of the court that stops your creditors from taking further action to collect their debts from you, such as by foreclosing, repossessing, garnishing your wages or attaching your bank account. The automatic stay typically remains in place throughout your bankruptcy proceedings. Therefore, a Chapter 13 bankruptcy filing may be a way to save your house from foreclosure, your car from repossession, or to handle IRS debt as long as payments are made according to the Chapter 13 plan.

After the Chapter 13 bankruptcy filing, the trustee holds a meeting of creditors, at which you must appear and answer any questions, and any potential problems with the proposed plan must be resolved. The bankruptcy court will then schedule a confirmation hearing in order to determine whether your plan is feasible and appropriate.

Assuming that your Chapter 13 bankruptcy plan is confirmed by the court, then it is up to you to make the plan work. In other words, you must comply with the terms of the plan in terms of repayment, and you must not incur new debts during the repayment period without Court approval. If you complete the plan successfully, then you will receive a discharge of any remaining amounts owed on your debts included in the plan.

As Corporations and Partnerships, you can file under either:

• Chapter 7 (Straight Bankruptcy) to wipe out most debts and get an immediate fresh start or
• Chapter 11 (Business Reorganization) to set up a repayment plan to pay back your debts over several years' time.

CHAPTER 11 BANKRUPTCY

Chapter 11 bankruptcy is available for corporations, partnerships, and individuals, but is used mostly by troubled corporations and partnerships. Chapter 11 allows the debtor to remain in operation while working out a reorganization plan in which the debtor proposes a plan of paying or settling the debts. The creditors vote on the reorganization plan and the plan also must be approved by the court. Chapter 11 is designed to preserve a viable business that otherwise would be lost in a liquidation.

Every year, for many businesses in the United States, the answer to financial problems is to declare bankruptcy, a legal proceeding in federal court that allows a business to be released from the obligation of paying some or all of its debts.

It is often said that bankruptcy gives a debtor a fresh start, but filing bankruptcy is not a panacea for all financial problems. Declaring bankruptcy can seriously damage a company's credit rating, making it difficult to establish credit or take out loans. Without good credit, some companies simply cannot operate. Many companies can work themselves out of even very serious debt without ever going near a bankruptcy court, so declaring bankruptcy should not be an automatic first step for a business experiencing financial problems.

If you or your business in Texas needs the assistance of an experienced Houston Bankruptcy Attorney , call The Fealy Law Firm, P.C. today at 866-751-1087 or complete the contact form provided on this site to schedule your free consultation.

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We serve: Harris, Fort Bend, Brazoria, Montgomery, Chambers, Galveston, Matagorda, Colorado, Wharton, Fayette, Austin, Waller, Brazoria, Grimes, Madison, Walker and San Jacinto.

The Fealy Law Firm is a Debt Relief Agency. We help people file for bankruptcy relief under the Bankruptcy Code and have done so proudly since 1992.

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