Bankruptcies fall into basically two types of categories – discharge of debts with no payments (chapter 7) and repayment plans for different types of debts (chapters 9, 11, 12, and 13). What type of bankruptcy is best for you depends on a variety of factors that include income, expenses, types of debts, long term goals and restrictions in various chapters. For instance, if you want to save a house, car or both, then a chapter 7 will not help. If you principally have credit card or medical bills and are current on your house and car payments, then chapter 7 may be the best solution. In order to accurately assess the best chapter for your needs, you should consider seeing a board certified attorney.
Bankruptcy should be the “option of last resort”. Prior to filing a bankruptcy, you should consider debt consolidation with a reputable and well known debt counseling company, if you have debts that can be consolidated. However, debt consolidation will not help on delinquent house or car payments. At Baker & Associates we assist people in submitting forbearance agreements on their homes. We also assist people with loan modifications. We will defend clients against credit card claims in state court lawsuits – and may be able to resolve credit card claims in state court lawsuits. We also will assist in credit card negotiations. We assist clients in many areas involving debt issues.
Bankruptcy is conducted in the federal courts. Bankruptcy is effectively a lawsuit that is filed against creditors. In order to file a bankruptcy, you must complete documents for filing with the court, you must complete a credit counseling course, and you must provide financial information for the court. After a case is filed, you will be required to meet with a trustee about 30 days after your case is filed. The process is different for chapter 7, 11, and 13 cases. The bankruptcy process should be completed for a chapter 7 in approximately 4 to 6 months from the date of filing. A chapter 13 case goes from 3 to 5 years. A chapter 11 case may be from 6 months to 1-1/2 years. During each step, we provide support and assistance to our clients.
CHAPTER 7 BANKRUPTCY
If you are facing overwhelming debt and considering bankruptcy, there are several options to understand. Of those options, Chapter 7 is the type of bankruptcy that allows an individual to discharge debts and move forward with a fresh start in a period of months. It can provide the quickest elimination of an individual’s debts. If you need the type of relief that Chapter 7 bankruptcy offers, contact Baker & Associates to get started.
Chapter 7 bankruptcy involves the liquidation of your non-exempt property (most people in Texas have very little, if any, non-exempt property) to pay your creditors and discharges your debts. Chapter 7 bankruptcy provides a “fresh start” for individuals trying to recover from debt.
Chapter 7 bankruptcy does not help with restructuring your house or car debts. If you are facing a foreclosure, a Houston bankruptcy attorney can help your understand which of your debts can be eliminated using Chapter 7 and whether or not it is the right option for you.
Changes made by Congress to the Bankruptcy Code in 2005 included significant changes to Chapter 7 bankruptcy. Filing a Chapter 7 bankruptcy is more difficult due to many added requirements. One of the most important changes was the “means test” which determines whether a debtor can file for bankruptcy under Chapter 7 or must file under Chapter 13 bankruptcy.
The Chapter 7 Means Test. The “means test” is one step used to determine whether an individual qualifies to file for Chapter 7 bankruptcy. The “means test” was implemented to address concerns of Congress with individuals with higher incomes filing Chapter 7 bankruptcies. However, the “means test” is only one of several steps used to evaluate whether an individual can file a Chapter 7 case. There are ways to qualify an individual for Chapter 7 who does not pass the means test, but you need an attorney who is actively involved in bankruptcy work and understands and knows the methods to qualify individuals for Chapter 7 cases.
If you cannot qualify for Chapter 7, you have the option to file under Chapter 13 or Chapter 11. For people who do not qualify for Chapter 7, a Chapter 13 case can be a very good solution. Chapter 13 does not mean that you must repay all of your creditors in full. Your payments in a Chapter 13 plan depend on many factors. An attorney who understands and knows the bankruptcy process can assist in structuring payments that are advantageous to you.
Contact a Baker & Associates debt relief expert today who can help you determine whether Chapter 7 bankruptcy is an option for you.
CHAPTER 11 BANKRUPTCY
Of the various types of bankruptcy, Chapter 11 is the one used by business entities or individuals that exceed the debt limits associated with Chapter 13 bankruptcy. Chapter 11 bankruptcy offers many benefits so you should take time to understand what it could mean to your business by contacting Baker & Associates.
Chapter 11 Bankruptcy for Businesses. Probably the most important aspect of Chapter 11 bankruptcy is that it allows a business or an individual to continue to operate and generate revenues, and collection actions by creditors are suspended, except as permitted by the bankruptcy court. The business and activities of the debtor are under the supervision of the bankruptcy court.
Chapter 11 bankruptcy offers many advantages to a business in financial trouble. For example, it allows the business to attempt to reorganize instead of liquidating, it saves the jobs of those people employed by the business that would otherwise be lost, and it preserves many of the business’s assets. A liquidation of the business to pay debts would mean the end of the business. Under Chapter 11, the business can continue to operate until it regains financial stability. If your business is evaluating Houston debt relief options, Chapter 11 bankruptcy may be a good alternative to consider based on these and other benefits.
Chapter 11 bankruptcy may be the most difficult type of bankruptcy. It requires the help of an experienced Houston bankruptcy attorney. While an individual can represent himself or herself in a bankruptcy case, a company, partnership, LLC or other legal entity must have an attorney for court proceedings. An experienced attorney can be the difference in successfully reorganizing a business or in having the business fail. You will need advice on many topics including dealing with creditors, filing required reports, defending creditors actions to repossess or foreclose on collateral, structuring a plan of reorganization and other aspects of chapter 11. Contact a board certified Houston bankruptcy lawyer for more information on Chapter 11.
Chapter 11 bankruptcy may be the solution you need if your business is in trouble and you are drowning in debt and creditor actions. It provides hope to business owners who are struggling with the economic downturn. With Chapter 11, a business can reorganize debt and survive to prosper once again.
Chapter 11 Bankruptcy for Individuals. Individuals who file for Chapter 11 bankruptcy are persons whose debts exceed the debt limitations for Chapter 13 or have the need for the more flexible structures of debt relief available in Chapter 11. Chapter 11 gives individuals an opportunity to reorganize their debts in a manner that will allow them to get back on track financially.
Chapter 11 will allow the restructure of debts on different terms and conditions than available in Chapter 13. However, the fees, expenses, and time involved are generally much higher for a Chapter 11 case. Chapter 11 is a bankruptcy where all creditors are allowed to participate by voting on a plan of reorganization.
If you are an individual whose current debt exceeds the debt limits of Chapter 13 bankruptcy, you will need to discuss the intricacies of Chapter 11 bankruptcy with an experienced board certified Houston bankruptcy attorney like Reese W. Baker. Chapter 11 bankruptcy will offer you the protection you need, but you will need solid legal support navigating the Chapter 11 process.
CHAPTER 13 BANKRUPTCY
While many individuals look to Chapter 7 bankruptcy as a way to recover from financial hardship, other individuals need to use a Chapter 13 bankruptcy. If you are behind on your home payments, behind on your car or truck payments, you owe money to the IRS, you owe back child support payments, or you owe on other assets you want to keep, or you owe on non-dischargeable debts, Chapter 13 offers the best way to restructure your obligations, recover from debt problems, and keep creditors from repossessing needed assets. Further, if you do not qualify for Chapter 7 bankruptcy due to high income, Chapter 13 bankruptcy may be the best option for you to help restore financial order to your life. Contact Baker & Associates to determine if filing for Chapter 13 bankruptcy is right for you.
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy requires you to make monthly payments to your creditors. How much you can afford beyond your normal living expenses will determine your monthly payments. Normal living expenses include your mortgage, car or truck payments, health insurance, food, clothing, and typical living expenses. A Chapter 13 plan is for a term of either 3 years or 5 years. At the end of the three or five year term, you will receive a discharge of any unpaid, unsecured debt, regardless of the amount paid by the Chapter 13 trustee to your creditors.
Chapter 13 allows you keep property that otherwise would have been liquidated under Chapter 7 bankruptcy. This means that Chapter 13 could allow you to keep your house, your car, and your business. If you are facing a Houston foreclosure, this may be one good way to prevent losing your house.
Your monthly payments go to a Chapter 13 trustee who divides the payments among your creditors and makes the payments to them according to the bankruptcy plan. A Houston bankruptcy lawyer can give you more information about monthly payment plans under Chapter 13 bankruptcy. In many cases, the monthly payments are based on amounts owed for a house or a car.
Chapter 13 bankruptcy has other benefits as well. It protects you from the collection efforts of your creditors and helps end the lender harassment that you may have had to endure. After you have made timely payments to a Chapter 13 trustee for a period of time, your credit scores will generally increase. You will be able to rebuild your credit more quickly. When looking at Houston debt relief options, think about Chapter 13 bankruptcy because it brings these many benefits that can put you back on the path to financial freedom.