Fort Worth Chapter 7 Bankruptcy Attorney

Helping Clients Erase Their Debt for a Fresh Start

Most people want to live up to their financial obligations. They want to pay their bills and adequately provide for themselves and their loved ones. Despite best efforts, those good intentions sometimes fall flat.

If you are struggling to pay your bills, asking for help is hard. Many Americans don’t consider bankruptcy until they are deep in debt. The fact is that only 39% of Americans have enough savings to pay a $1,000 bill they weren’t expecting. The HVAC stops working. You are injured in a car accident. Surprise expenses on top of thin budget margins are devastating for many people.

The Fort Worth Bankruptcy attorneys at the Law Offices of Mark M. Childress are ready to help you get back on your feet.

What Is Chapter 7 Bankruptcy?

Chapter 7 is often referred to as liquidation bankruptcy. Nonexempt assets can be liquidated – sold – and the proceeds used to satisfy outstanding debts. In many cases, the money made from selling your property is not enough to pay off all the debts in full. When that is the case, any remaining unsecured debt is generally erased. In bankruptcy-speak, that is called “discharging” debt.

Once Chapter 7 is filed, all creditors must put a hold on any legal action against the debtor. Phone calls, harassing letters, and other tactics to coax payment are barred.

Qualifying for Chapter 7 in Fort Worth

Chapter 7 is a preferred option for many because it permanently erases most debt and can be completed in about 6 months. Whether you qualify for Chapter 7 depends on your income relative to the median income in Texas as well as the size of your household. These elements are used in what is called the “means test.”

The calculation looks at your gross income for the past six months and multiplies it by 2. If your income is less than the median income in Texas for a household of the same size, you will probably pass the means test. You will be able to file under Chapter 7.

Those that do not pass the means test should consider filing under Chapter 13. Our attorneys can help you determine which bankruptcy chapter is best in your situation.

Assets Exempt from Liquidation

Chapter 7 bankruptcy does not mean you will lose everything. The bankruptcy court wants to leave you with resources. Certain property can be exempt. Federal and state laws outline what property can be safeguarded from liquidation. Some states opt out of the federal exemptions and use only their own. Texas allows debtors to use either the federal or state guidelines.

The Texas exemptions are generally more generous and used by most debtors:

• Homestead Exemption: Allows protection for up to $146,450. You can protect an unlimited amount of home equity if you have lived in the state for at least 40 months. Another stipulation is that the property doesn’t exceed 10 acres in an incorporated jurisdiction or 100 acres elsewhere.
• Motor Vehicle: Debtors with a valid driver’s license can protect the equity in a motor vehicle.
• Personal Property: You can protect up to $50,000 in personal property if you are single. A married couple filing for joint bankruptcy can exempt up to $100,000. This includes clothing, limited jewelry, furniture, household good, livestock, up to two firearms, and more.

In addition to the above exemptions, health savings accounts, retirement accounts, and pensions are also untouchable in bankruptcy proceedings.

Secured vs Unsecured Debt

There are two basic debt categories: unsecured and secured. Secured debt uses property as collateral to back a loan. Unsecured debt is not tied to collateral.

Examples of unsecured debt that might be discharged in Chapter 7 include the following:

• Credit Cards Balances
• Medical Bills
• Signature Loans
• Utility Bills
• Signature Loans
• Apartment Leases

Mortgages, home equity loans, and most car loans are examples of secured debt. Federal student loans generally fall into this category. Secured debt is not discharged through bankruptcy. Other debts that cannot be erased through bankruptcy include child support, alimony, certain taxes, and criminal fines.

Prioritizing the Debt

The trustee court appoints an unbiased trustee to oversee the process. The trustee sells nonexempt assets to maximize the potential return to pay the unsecured debt. Unsecured priority debt is paid first. Child support and personal injury claims against the debtor are paid first. Secured debts are paid next. Nonpriority, unsecured debt like credit cards are paid last.

If there aren’t enough funds from the liquidation to cover the nonpriority, unsecured debt, a percentage of those debts are paid, and the balance is discharged. A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.

Businesses Can File Under Chapter 7

Chapter 7 bankruptcy is the most-used chapter for individuals, but businesses can also file for liquidation under Chapter 7. Corporations, partnerships, and sole proprietorships that are organized as LLCs (limited liability companies) can use Chapter 7. This action is only appropriate in a small subset of situations. Since the business cannot use exemptions, the individuals typically file for personal bankruptcy instead of the business.

Don’t let your financial struggles continue to negatively impact your health, relationships, and financial well-being. Contact us today to discuss your bankruptcy options. Call (817) 497-8148 to schedule a consultation. We serve the counties of Tarrant, Parker, Johnson, Wise, Hood, Denton, Somervell, and Jack.