If you’re struggling to control your financial situation, you aren’t alone. According to a CNBC report, the average American carries $90,460 in debt. Thousands of individuals have trouble making minimum payments on their bills each month, leading their debt to spiral out of control. Declaring Chapter 7 bankruptcy is sometimes the most practical solution for those struggling with debt. Chapter 7 bankruptcy allows you to wipe away your debts by liquidating your assets to a trustee, and when your bankruptcy case is complete, most of your debts will be gone. Though declaring Chapter 7 bankruptcy may seem like a straightforward proceeding, the process can be challenging to navigate without a debt attorney. Here is what you need to know about this type of bankruptcy and how our team at Ciment Law Firm, PLLC, can help you take control of your debt.
Chapter 7 Bankruptcy: The Basics
Bankruptcy is a legal proceeding that allows those who cannot pay back their debt to receive a fresh start. Declaring bankruptcy erases your qualifying debts and prohibits creditors from collecting payments until the legal proceedings are over. Chapter 7 bankruptcy allows you to liquidate your property and other assets to pay your debts. However, in most cases, part or all of your property will be exempt from liquidation. The court will appoint a trustee to collect your assets, sell any that are not exempt, and then use the proceeds to pay your creditors. Some individuals choose to file for bankruptcy because they do not have sufficient income to make regular payments on their debts. Others declare bankruptcy because their bills have skyrocketed and feel impossible to manage. Most people who decide to declare Chapter 7 bankruptcy have sizable credit card debt or unsecured bills and own few assets, so sacrificing their property is a logical choice. After filing under Chapter 7, you will need to wait at least eight years before filing again. Further, the bankruptcy will appear on your credit report for up to ten years and will decrease your credit score drastically. However, many people who decide to file already have low credit scores, lessening the impact of bankruptcy on their report. Declaring Chapter 7 bankruptcy is not a smart financial decision for everyone, and you should understand what this process entails before moving forward. Our debt assistance lawyers can help you discover the best legal solution to your financial struggles.
How to Declare Chapter 7 Bankruptcy
Before you can declare bankruptcy in Texas, you will need to disclose your financial circumstances to a bankruptcy court who will determine your eligibility. The qualification process will involve the following steps.
Determine What Debts You Hope to Discharge
The types of debt that you have incurred play a role in whether you qualify for Chapter 7 bankruptcy. The following debts cannot receive forgiveness through Chapter 7 bankruptcy in Texas:
- Child support
- Student loans
- Fraudulent debts
- Personal injury debts
- Recent income tax debts
- All other tax debts
However, declaring Chapter 7 bankruptcy can stop debt collection harassment, repossession of property, and foreclosure of your home. The best way to know if you can discharge some or all your debt through Chapter 7 bankruptcy is to speak with a competent debt lawsuit attorney.
Complete Official Bankruptcy Forms
Once you determine if your debt is eligible for bankruptcy, you will need to file paperwork through the Texas bankruptcy court. These forms are free on the U.S. Courts website, but you will need to pay a filing fee or request a fee waiver when you submit them.
Pass the Means Test
Along with your bankruptcy paperwork, you will also need to take a “means test” that indicates whether your financial situation allows you to qualify for bankruptcy. The test will ask you to identify your family’s current monthly income (CMI), or the average monthly income you received during the six months before your filing date. If your income is less than the median Texas income, you automatically pass; if it is more, you may need to deduct expenses before you can move forward. Our debt resolution team can help you identify if your income meets state requirements for Chapter 7 bankruptcy.
Undergo Credit Counseling
Before you can submit your bankruptcy forms, you must complete a credit counseling session from an approved Texas provider. Once you file your case, you will need to take a debt management course as well.
Contact a Bankruptcy Attorney Today
The most important step you can take when filing Chapter 7 bankruptcy is to hire a competent, responsible legal team who will represent your financial situation well. Our dedicated team at Ciment Law Firm, PLLC, is committed to helping clients overcome financial burdens by guiding them through every step of the legal process. If you or a loved one is struggling to manage debt, we may be able to help. Contact Ciment Law Firm, PLLC today at (281) 937-3949 or fill out the form on our website to schedule your free consultation.
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Disclaimer: The information in this document is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.