How Does Bankruptcy Work?

The Bankruptcy Code allows you to discharge (eliminate) certain types of debt through a bankruptcy filing. Dischargeable debts are primarily unsecured debts (that is, debts that are not guaranteed by a specific asset, such as a car or home). In addition, some debts are not dischargeable. These include debts for alimony and child support, student loans, and tax debts.

In Chapter 7 bankruptcy, you can keep certain assets, such as a car, household goods, and a portion of your paycheck. In Chapter 13 bankruptcy, you reach an agreement with your creditors to pay back your debt over a period of three to five years.

Which type of bankruptcy is for me?

Chapter 7 bankruptcy is commonly referred to as a “straight bankruptcy.” Chapter 7 bankruptcy is for people who do not want to pay back the debt they owe.

Chapter  13 bankruptcy is commonly referred to as a “wage earner’s bankruptcy.” Chapter 13 bankruptcy is for people who want to pay back most of their debt but need more time to do so.

How much does bankruptcy cost?

Chapter 13 bankruptcy typically costs $1,700 to $2,500. Chapter 7 bankruptcy typically costs $1,700 to $3,000. The court filing fees vary by state.

What does it mean to be discharged of debts?

If you file for bankruptcy, it means that you are discharged of debts. If you are discharged of debts, it means that you are relieved of your obligation to pay back the debts. This means creditors cannot attempt to collect on the debt in the future, nor will you face legal matters over any remaining balance.

If you have questions about how to get out of debt or the benefits bankruptcy can offer, contact our office to speak to a qualified Houston bankruptcy lawyer today.