Texas bankruptcy law
It is usually said that Bankruptcy to a debtor is like a new day after a long, scary, endless night. Just imagine you are unable to payoff the debts and the pile is going on increasing, so rather than letting that debt pile up and become a cause or serious trouble to you, it would be far more better and sensible to declare that you are Bankrupt.
But Texas Bankruptcy is not magic or Woo-do, that you just say Abra-ka-Dabra and get rid of all your debt; because you cannot decide when bankruptcy is the right choice. But if you are unable to get out of debts for a long time say 5 to 6 years, you may consider bankruptcy as an option. The situations where you can consider bankruptcy are :
* When you face a severe financial setback for example if you lose your job for some personal reasons (may be due to severe illness) and you dont have any other source of income.
* If you are a lawyer and you lose the case of a major client, who leaves you or asks you to return a part of the amount or even pay compensation. Hence doing so you become bankrupt.
You cannot get rid of all your debts by bankruptcy because you still have to fulfill certain obligations like domestic support, study loans, fraudulent debts, fines or penalties of government agents. If you are a consumer you can file for Texas Bankruptcy under any of the following:
Straight Bankruptcy:-When you can erase all your debts except those listed and you can get a fresh start.
Wage Earner Bankruptcy:- Where you pay back your debts for over several years by chalking out a Repayment Plan
The New Law:
To put an end to Bankruptcy Abuse a new bankruptcy law was introduced on 20th of April 2005, the President signed the Bankruptcy Abuse Prevention & Consumer Protection Act. This act limits your access to US Bankruptcy Courts. Since Ch.7 is the most simple & quickest form of bankruptcy. It is easily available to individuals and married couples. Under the Bankruptcy Act if your monthly income is more than the states median income then a means test will decide if you may file a Ch.7 Bankruptcy. All your taxes and other payments are deducted from your income. If your income is less than $100 per month then you are entitled (eligible) for bankruptcy. A lengthy document called a Statement of Financial Affairs is to be filed in the bankruptcy court. This statement contains a list of debts in details like priority debts (taxes), secured debts (loans of any kind, mortgages of home, etc.)
Other information like names and addresses of the creditors, list of assets, etc. should be provided in the document. It is very important to complete this document accurately because the debts which are not listed in the statement or any assets which are not listed in order to hide them from the creditors will result in charges of bankruptcy fraud.
Creditors are also prevented from trying to collect on your debts through automatic stay. This automatic stay is designed to preserve your property and to give you a break from litigation. If anyone wants to continue collection proceedings during the bankruptcy process the must show the bankruptcy judge, after a hearing, that there is a cause to do so. (For example, the value of the property might deteriorate in value during the bankruptcy process).
If you do not get to keep any property, the trustee will take control. They will sell your property and after deducting the expenses, they will give the remaining amount to the creditors. However, if you earn any wages after you file the case, then they are yours.
After the bankruptcy case is filed, you must attend the first meeting of the creditors (called 341 meeting). You will be questioned by the trustee about your property and debts. The creditors too may question you. All you have to do is just cooperate with the trustee by giving the necessary information.
After the 341 meeting the creditors have 60 days to convince the bankruptcy court and the trustee, they will review your income and expenses to see if there is any amount left to pay to the creditors.
All that can be kept:
There are certain assets that are kept by the debtor, these assets cannot be claimed by the creditors to satisfy a debt. This is allowed by the Bankruptcy Code, and these assets are known as Exempt Assets. The amount of assets that can be claimed by the creditors vary from state to state, depending upon where the debtor filed the bankruptcy. You have two choices.
* Using the federal exemption statutes.
* The Texas exemption.
If your choice is Texas exemption then you can keep:
your home about 200 acres for families; Personal property worth $30 thousand; vehicle; jewelry; food & clothing, home furnishing, trade tools; etc. not more than 25% of the total exemption. Since a bankruptcy does not wipe out voluntary liens, the lender has every right to foreclose (since it is his last resort) if you do not pay regularly, because the lender is not really interested in your property, he only wants the money he has loaned, so if you pay regularly he is happy and you too can be happy. If you owe money on your vehicle then you can surrender the vehicle and be free.
According to chapter 13 Bankruptcy, if you are the only person, you can pay off your debts within a period of five years. This option gives you enough of time to pay your debts. You dont lose your home or other property; but you will need a stable income along with disposable income. When you file the chapter 13 petition, you must submit a proposed payment plan for three to five years and all the tax returns for the subsequent years must also be filed. This proposed plan must be reviewed by the trustee and distributed to creditors. If the creditors are not satisfied with the plan they have the right to object. If the plan is approved then you can keep your assets. Further you have to make monthly payments to the trustee who in turn will make the payment to the creditors. Your unpaid debts Texas Bankruptcy are discharged once the plan is completed as approved but in case the repayment plan is not completed as approved then you will have to seek the lawyers help.
After Effects of Bankruptcy:
*Look before you Leap is a saying that fits this best. As you might feel that Bankruptcy is a Boon, because it helps you get rid of your debt, but you may never know, it can be a curse in disguise. This is so because once you file for Texas Bankruptcy, it is very difficult to get a credit during that period of 10 years. As the consumer law allows the credit companies to access this credit report that contains all your bankruptcy filings. Any bank, landlord, credit card company or employer who has legal access to a copy of your credit report will know of your unstable financial past.
Conclusion:
There are other ways to resolve financial issues, better than Bankruptcy. You may receive many letters from the banks and creditors to repay back their money, but once you mention to them that you are planning to file for bankruptcy even their minds will change and it will make them think twice because they know that bankruptcy means that they will get only a fraction of the amount that you actually owe them.
Instead you can plan repayment options like,
* Reduced payments for short period.
* Short delay in making payments. (Without ignoring letters or breaking promises)
The creditors will definitely agree to these repayment plans as they very well know that even if they try to sue you and approach the judge it will be very time consuming and expensive.
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