Title: Chapter 7 Bankruptcy: Understanding the Basics
1Chapter 7 Bankruptcy
Understanding the Basics
2If you are facing foreclosure, your paycheck is
being garnished, or you feel like you are
drowning in bills, IT MAY BE TIME TO CONSIDER
BANKRUPTCY
1
Bankruptcy Protection
3A chapter 7 bankruptcy can provide you with a
fresh start while still protecting your home and
your important assets in most cases.
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US Bankruptcy Code
Bankruptcy protection is found in the U.S.
Bankruptcy Code, meaning that the federal courts
have jurisdiction over bankruptcy proceedings
5An individual may file bankruptcy under chapter
7, 11, 12 or 13 of U.S. Bankruptcy Code.
6Chapter 11 -- Typically used by small businesses
7Chapter 12 Family farmers or fishermen
8Used by debtors with significant income and/or
valuable non-exempt assets
Chapter 13 Wage earner plan
9Chapter 7 Quickest way to a fresh start
Simplest and fastest chapter, it is the most
popular option for individuals
103
Chapter 7 Specifics
The vast majority of debtors who file chapter 7
are able to retain their assets due to strong
exemption laws under state and federal law
11Almost all debts are discharged in a Chapter 7
BankruptcyThat means that creditors are
forbidden from trying to collect those debts from
people who have filed Chapter 7
12Other chapters require debtor to repay debts over
time
134
The Means Test
Debtor must pass means test to file chapter 7
14Compares your income to other Texas residents
15If your income is over the median for your area
it becomes more complicated
16The MEANS TEST is a very complicated form. You
need an experienced bankruptcy attorney to assist
you complete it.
175
Chapter 7 Process
18Debtor completes credit counseling course prior
to filing
a
19Petition and bankruptcy schedules filed with
bankruptcy court
b
20The filing of the case creates an injunction
against all creditor collection activities.No
court order is necessaryThe filing of the case
is all that it takes to stop creditor collection.
c
21The trustee is automatically appointed. The
trustee reviews the bankruptcy filings to make
sure they are correct and all assets are properly
claimed as exempt.
d
22Meeting of creditors is held 20-40 days after
filing at a conference room at the court
house.No judge is present.
e
23Creditors may ask about your income and debts
24However, usually no creditors show up to the
meeting of creditors in Chapter 7 bankruptcy
cases.
25Debtor must complete a debtor education course
either online or by watching a DVD.
f
26Debtor is discharged from virtually all debts.
g
276
Exemptions
The U.S. Bankruptcy Code includes exemptions that
a debtor may be entitled to use. Additionally,
the individual states may also create exemptions.
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297
Keeping Your Home, Vehicle and Possessions
Texas has very pro-debtor exemptions that allow
most debtors to retain their homes, vehicles, and
personal possessions
30Unlimited homestead exemption up to 10 acres in
a city and up to 100 acres in the country (200
acres if family)
31Pets and livestock up to 30,000 (60,000 for
head of household)
32One vehicle per family member
33Home furnishings, food, clothing, family
heirlooms, jewelry and two firearmsup to 30,000
in value (60,000 for families)
34Pensions and social security payments are totally
exempt.IRAs and Retirement accounts are exempt
up to 1 million.
35Tools of the trade and farming equipments are
exempt as well.
36Life Insurance is also exempt.
378
Debts That Cannot Be Discharged
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398
Credit Post-Bankruptcy
Worrying about your credit after bankruptcy is
understandable however, for most debtors their
credit improves significantly after a Chapter 7
bankruptcy.
40Debt to income ratio improves the day the
bankruptcy is filed.
41You cannot file a Chapter 7 Bankruptcy case for
at least eight years
42Many debtors can secure car loan during the
Chapter 7 or after the discharge if they have
employment or steady income.
43Obtaining a mortgage loan may take closer to two
years post-bankruptcy
44Want to Know More About Chapter 7 Bankruptcy in
Texas?
45Get Your Bankruptcy Questions Answered
Click to visit centraltexasbankruptcy.com
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