Filing for bankruptcy is a big decision, but in reality it's a simple process when you follow the rules, are honest, and hire an experienced bankruptcy lawyer. This guide focuses on Texas bankruptcy law. It can, however, help filers anywhere, and can lead you to a better understanding of what exactly happens in bankruptcy court.
What Texas Chapter 7 Bankruptcy Means
Chapter 7 bankruptcy is a liquidation, but that sounds like you are losing everything.
Some say you lose nothing, some say you lose a lot, and the truth is quite often in the middle. You may in fact lose some property, assets, and money. You won't lose everything, and there is a great chance you will lose nothing.
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You are discharging thousands if not tens of thousands of debt by filing with your local Texas court. In order to fund that, you may have to lose some assets.
Is Filing Chapter 13 Better?
Chapter 13 may be better, especially if you own a home. On the other hand, you have to pay some if not all your debts. You do get protection from creditors: they cannot foreclose after you file, cannot take your car, and your other possessions can be protected too.
Texas Bankruptcy Court for Chapter 7
You rarely have a huge role in what happens in Texas bankruptcy court. Depending on where you live, your court date will be in either Northern, Southern, Western, or Eastern Texas bankruptcy courts. If you hire a lawyer, there should be no problems at all. If you hire no lawyer, likely a mistake, you will then have more of a role in court.
Texas Court for Chapter 13
In Texas bankruptcy court as in other state courts you have more of a role in a Chapter 13 bankruptcy. Since you are paying over a 3-5 year period, it's important you get a lawyer who you communicate well with. You will still be discharged of debt, but because you paid them as part of your plan. You do make an appearance in court, but your role is still limited.
Choosing a Lawyer
Your role in Texas bankruptcy court is minor in comparison to your lawyer. It's his or her job to ensure you follow the laws involved. For instance, you have to show proof you are eligible for either Chapter 7 or Chapter 13. You would show current income and/or current debts. If you make too much, you would not be eligible for Chapter 7. If you owe too much - a very high number and rarely a problem - you would not be eligible for Chapter 13.
How a Lawyer Helps
Your lawyer is invaluable in handling the court date and ensuring you save the most money and protect the most property. Bankruptcy lawyers are quite cheap in comparison to other lawyers, especially criminal lawyers. You typically pay from $1,000 to $2,000. If you discharge $50,000 in debt or protect your home, it's more than worth it.
How To Prepare
You need to meet with a credit counseling company approved by Texas bankruptcy courts in order to file. This should be one of your first steps. You should consider consulting with a lawyer first in order to see if you're eligible and how best to plan. Since you will be showing current income, unsecured and secured debts, and other proof of eligibility, you should start putting these together.
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